Let’s start with the sell-off in semiconductor stocks. After the sell off across most of the semiconductor space we are now seeing bullish institutional options flow coming back into semiconductor names, especially SOXX, the semiconductor ETF.

https://preview.redd.it/vr7cnpcf4zbh1.png?width=456&format=png&auto=webp&s=21e131c1baa5a286f4650885a94a6b8157c3ac4f

We are also seeing supportive flow in AI infrastructure names such as NBIS, along with several other names highlighted in the flow analysis.

This is being partially offset by bearish flow in leveraged semiconductor products such as SOXS, but that bearish activity appears to be diminishing.

https://preview.redd.it/itavawrh4zbh1.png?width=470&format=png&auto=webp&s=69b0df238505622d2f80d04a4d1a84f93270aadc

As mentioned, SOXX attracted roughly $10 million in flow, and both market-maker positioning and broader market-positioning charts show that the ETF is currently trading near the support we highlited in yesterdays analysis.

The risk factor and why you should not be v agressive is the buildup of positioning on $500 and $520 which are likely to provide support.

In addition the escalation in the Middle east is likely to weigh on momentum for now and there could be better entries.

[Market maker exposure - left. Market positioning - right](https://preview.redd.it/02q9oqkj4zbh1.png?width=743&format=png&auto=webp&s=265d9e6569abeebd764831ee2126b5e8d7b2a346)

  
The S&P 500 is not showing major signs of stress but we still need to see SPY break through the 750 level. Yesterday the SPY also bounced off the exact level  we shared, but if the sell-off persists, its more likely to see $740 tested. If it falls $730 is likely to be the low for the day

https://preview.redd.it/b9brn5xk4zbh1.png?width=794&format=png&auto=webp&s=0c5d95d972bf4623c1c8d6a7c1517bf91e8e9d69

The positive takeaway is that the VIX is not showing extreme concern. 

That said, the market is currently showing some VIX backwardation, with spot VIX trading around 16 while the short-term July 22 VIX futures contract is closer to 14.

This means investos are paying a premium for immediate protection today, while the futures market is pricing in a decline in volatility over the coming week

 In other words, the market appears to be treating the current volatility spike as short-lived assuming there is no further escalation in risk.

https://preview.redd.it/vs4xyefp4zbh1.png?width=1073&format=png&auto=webp&s=5a4f1f2fd15fd0eaa0ace45ad3d9d9acba838c66

[VIX market positioining remains negative; Wall at 20](https://preview.redd.it/lm0e3q3q4zbh1.png?width=790&format=png&auto=webp&s=faa140580abb1723392ad671a9631522709285af)

The other major concern for the market is the U.S. strike on Iran and the news the ceasfire is off. 

There has been a  pickup in bullish market positioning in the USO but the overall read is still bearish. As you can see there is not much positioning above $120 which is likely to be the cap for USO if it coninues to rise today.

https://preview.redd.it/rgewzeqv4zbh1.png?width=798&format=png&auto=webp&s=f19f5ae33248d8ff89aea811dcccb026eddb366c

Prediction markets are signaling that that traffic is v unlikely to return to normal in July and the odds for the reurn to normal by years end have been falling 

https://preview.redd.it/h836q2qt5zbh1.png?width=1082&format=png&auto=webp&s=06b917783c751e5918b1b9112274d48707465859

Caution is the way to go for now. At least until the market digests the news.



Markets note after the sell-off in semiconductor stocks and the end of the ceasefire