It goes without saying, yesterday's market action was ugly. The clearest signal of further risk aversion in my mind came with the fake breakout higher on Tuesday, the last day of May. In hindsight it is now clear month-end games were in high gear last week, and until Tuesday of this week. The blatant disrespect of the 50 day moving average on the S&P 500 has proved itself once again, see chart below. We are now again below the 50 day on the SPX, NDX, and RUT. On the SPX specifically we are are a mosquito fart away from breaching the May lows and testing the much stronger $1300 support area.
In my mind it doesn't pay to take on excessive risk in either direction here. We are keeping our leashes tight and will take quick jabs at the market here and there for cashflow. That most likely will also remain our strategy for the entire summer…base hits rather than homeruns. And you know what? In the end that usually wins the game.