Yesterday decisively broke the back of the 1140 SP500 support, so we are in defensive mode..

One day does not confirm the break, so we need to see another close below that level.

Hedges should have begun to kick in here and we will be looking for evidence this trend will continue to add to hedges if necessary.

Stock futures have made their way to the neutral line as the euro extends its rally to now sport a 1.3% gain against the dollar. Its strength comes in the wake of the decision by European Central Bank to lend billions in six-day notes to ease today’s expiration of 12-month notes and Spain successfully auctioned off a few billion euros worth of five-year notes.

While this didn't help the europeon markets it did allay some of our market's fears about rampant defaults in the Eurozone.

Today has a historically favorable seasonality, but that didn't help us the last few days. 17 of the last 20 years have been positive for July 1. Best case would be a reversal above that 1040 line indicating a possible capitulation yesterday, but we aren't going to bank on it.