Today will most likely be a quiet one as there are no financials to report and many are still basking in the afterglow of a "successful something" that happened in Greece. We are not quite sure what it was, but the "Hopium" being handed out from the European politicians is keeping most on an even keel.
We do know that Germans, which make up a sizable portion of the Greek tourism industries, are afraid to travel to Greece now because of retaliation because of EU-mandated austerity cuts that have left the country in a deep recession.
The markets did not advance today as I thought they might on Friday, but the advance of the USD to above 80 cents, cooled that thought late in the trading session. But Mr. Market, as usual, didn't do what financial experts were thinking and that was a "meaningful: decline today was possible. The market is weak, but sort of "floating" along within a narrow trading range.
The correction last Tuesday was cut short by favorable employment and European news, but it should serve as a shot across the bow as there is more to come. I don't expect anything to really happen until Wednesday at the earliest. The near term outlook is bearish and until the 500 can advance above ~1377 it will stay that way.
For those not easily being swayed the "expectations" are expressed relatively well by the low volume this morning. A repeat of the daily ritual of the past several months. Yes, I expect the markets to fluctuate up and down most likely in a narrow range, but the lack of participation will keep traders and long term investors on the sidelines.
@telegraph: "Simon Denham, managing director of Capital Spreads,says:
Investors continue to tread cautiously following the finalisation of the Greek debt swap over the week end and the impending expected official go ahead for the second bailout today. Ever since the sharp declines of early last week investors have been calling into question the sustainability of the rally so far this year and since we’re yet to have taken out the highs of the year following the recovery from last week’s lows, the stuffing seems to have been temporarily knocked out of the bulls.
The main reason for the soft start today is once again China.
This time a week ago their downgrade to GDP forecasts was the catalyst for the sell off along with other worse than expected growth figures from other emerging economies such as Brazil. Today Chinese export growth has disappointed and so the risk on rally is being kept in check.
China’s part to play in the global recovery is crucial and with data like this it fuels concerns about the possibility of a harder landing for their economy than was previously expected. If Europe and the West are not buying Chinese goods at anywhere near the rate that they have been in the past few years, then China’s economy could be in for more headwinds which is one of the biggest threats to global growth right now."
@leavitt: "The Asian/Pacific markets closed mostly down, but only Taiwan (down 1.1%) dropped more than 1%. Europe is currently trading mixed and with a down bias – there are no 1% movers. Futures here in the States point towards a gap down open for the cash market.
The dollar is flat. Oil and copper are down. Gold and silver are down.
(10 min gold)
"The long term trend is up; the near term trend is less clear. The market took a big hit last Tuesday but then recovered quickly the following three days. Overall it looks like the market has been in consolidation mode the last month. Zooming in there are hurdles that need to be climbed. The banks need to take out resistance. The semis need to hold support. The AD and AD volume lines need to continue up. New highs need to expand again. Several other breadth indicators need to reverse. The market has had a 1-track mind the last couple months; can it continue to ignore nonsupportive data?
One key heading into this new week is the dollar. For the most part, the dollar and the market have moved opposite…when the dollar moved up, the market dropped. Here’s the S&P vs. the dollar. Last Friday the dollar moved up with force and closed at its highest level in two months. If it continues, the market’s upside potential is limited."
(USD 30 min chart)
But just as the Greek news starts to become old hat, the other European Zone members are starting to get into the news.
@telegraph: "Reuters is reporting that EU diplomats have said finance ministers will suspend €495m in funds for Hungary tomorrow over failure to control deficit."
So hang in there, wait for the correction that is coming.
Written by Gary