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01Jul2015 Market Update: Markets Slip Off Morning Highs And Are Expected Fall Further Along With Falling Oil Prices

Written by Gary

Today it is all about Greece. Markets opened almost one percent higher and have gradually melted off the morning highs as a defiant Prime Minister Alexis Tsipras urged Greeks on Wednesday to reject an international bailout deal. WTI oil has fallen solidly into a key support on surprising news of larger than expected inventory build, but is expected to rebound fractionally this time around.

Baring any surprising positive news, the markets are expected to fall off fractionally as the U.S. dollar rises, but remain In the green by the closing bell.


Here is the current market situation from CNN Money

North and South American markets are mixed today. The S&P 500 is up 0.40% while the IPC gains 0.03%. The Bovespa is off 0.64%.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 57%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 14%
Investors Intelligence sets the breath Above 50 bullish 52.1%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. -35.64
StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages.

44.01%

StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 58.26%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 58.20%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 24.20
StockChart.com Consumer Discretionary ETF (XLY) As long as the consumer discretionary holds above [66.88], all things being equal, it is a good sign for stocks and the U.S. economy 77.03
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,831

What Is Moving the Markets

Here are the headlines moving the markets.

Fed's Looming Problem: Too Little Debt

A dearth of Treasurys will limit the Federal Reserve's ability to affect long-term interest rates.

"What If Berlin And Frankfurt Do Not Budge" - How Varoufakis Saw The "Worst Case Scenario"

Over a year ago, and long before he became the mascot for fraught negotiations between Greece and its creditors, Yanis Varoufakis penned a lengthy essay on what might happen should the Greek government decide to stand firm in the face of pressure from Brussels, Frankfurt, and Berlin.

Earlier today we learned that in fact, Greece will stick to its negotiating position even in default and will remain defiant to the end, or at least until the voters who swept PM Tsipras and Varoufakis into office indicate at the ballot box that concedeing the Syriza campaign mandate is an acceptable outcome. With the government urging Greeks to vote "no", the Tsipras and Varoufakis' gambit will be put to the test next week, or perhaps even as early as this afternoon when the ECB could decide to effectively bring the Greek banking sector to its knees.

In this context, we bring you Yanis Varoufakis' vision of the endgame, straight from the embattled FinMin himself:

That Greece has the right and the opportunity to deploy these bargaining cards there is no doubt. The important question is this: What if Berlin and Frankfurt do not budge? What if they tell Athens to â€'go jump of the tallest cliff'? The Greek government currently claims that it has a budget surplus. While I strongly doubt this claim, I suspect that a small primary surplus can be concocted through some additional cost cutting and a leximin squeeze of top public sector incomes downwards (without affecting the lowest incomes, pensions and benefits). That should suffice to allow the Athens government to meet its needs during any medium term standoff with Berlin and Frankfurt, as the Greek state will ...

Greece's Tsipras digs in against bailout

ATHENS/BRUSSELS (Reuters) - A defiant Prime Minister Alexis Tsipras urged Greeks on Wednesday to reject an international bailout deal, wrecking any prospect of repairing broken relations with EU partners before a referendum on Sunday that may decide Greece's future in Europe.
...

Stocks Tumble After Eurogroup Meeting Ends: "No Talks Until After Referendum"

Surprise! The Eurogroup conference call has ended and there's no deal in sight until after the referendum.


*KAZIMIR SAYS NO GREECE TALKS UNTIL AFTER REFERENDUM

Small Caps are leading the way...

Puerto Rico Utility Makes Payments to Bondholders

The Puerto Rico Electric Power Authority paid all principal and interest due to bondholders, buying the troubled utility time as it works to reach a deal with creditors.

Strong truck, SUV demand helped Ford, GM raise prices in June

DETROIT (Reuters) - Strong demand for sport utility vehicles and trucks in June helped General Motors Co and Ford Motor Co offset slowing demand for sedans by allowing them to raise prices on their trucks.

China Approves Six IPOs Despite Market Turmoil

China's stock regulator approved plans for six initial public offerings despite a market slump into bear territory and no sign of immediate recovery.

LTV 137% - In Unprecedented Development, Lenders Now Take Record Losses On Every Used Car Loan

This wasn't supposed to happen.

With the US consumer hunkering down in 2015 and barely spending more than in the comparble period last year, the only silver lining had been auto sales driven almost entirely by access to cheap credit; in fact, as the chart below shows while revolving credit has barely budged from its post-crisis lows with consumers still failing to fall for the "recovery" narrative, Uncle Sam's zero cost loans which are now reaching well over 6 years in average duration have provided a generous support for the US auto industry. In addition to the bubble in student loans, car loans have been the only confirmation that the US consumer - that driver of 70% of the US economy - is still alive.

So in a world in which one can buy cars now and worry about the costs later, much much later, auto sales should have been soaring as they have been in recent years, right?

Well, not for GM, which moments ago reported a surprising drop in June auto sales, which declined 3% M/M to 259,353 from the prior month, driven by an 18.1% plunge in Buick sales, with Chevy and Cadillac also posting declines, despite expectations of a 3% headline increase. This even as GM announced pickup deliveries were up 33% with the Silverado up 18%. Curiously, GM's main domestic competitor, Ford, reported a 9% drop in F-Series sales in June.

Algos Sell The "Leap Second" Rip

The world saw a potential Y2K-moment overnight and just as in 2000, the world did not end. An extra leap second was added, potentially blowing up every computer in the world... but as the following chart shows, for the algos, it was just a buying (and selling) opportunity.

Source: @NanexLLC

No Easy Way Forward for Markets

The stock market has shifted to neutral, and investors don't expect the rest of 2015 to be a joy ride.

Big U.S. investors expect Greeks to vote in favor of bailout: Reuters Poll

(Reuters) - U.S. investors expect Greek citizens to back a cash-for-reforms deal proposed by the nation's creditors in a July 5 referendum, according to a Reuters poll conducted this week.

Jim Bianco Rages "The Recovery Ship Sailed", Bashes Big Govt Believers, Slams Greek Risk 'Deniers'

"Today is Day 1 of Year 7 of the 'recovery', and yet economists everywhere proclaims 3% growth is just around the corner," rages Jim Bianco as he addresses what 'bugs him', exclaiming "that ship has sailed." Bianco and Santelli go on to slay Keynesian big government dragons and the incessant bullshit from officials like Jack Lew who opine on Greece and other potential systemic risks as being a non-event - "what is priced in is that everything will work itself out at the 11th hour," leaving a huge asymmetric risk.

Well worth the price of admission...

'Boots On The Ground' In Greece: "Stop The German Bloodletting"

Submitted by Simon Black via SovereignMan.com,

Since my arrival into the country late May, the topic of most discussions I overhear everywhere are naturally about the debt negotiations.

I'd call opinions in support or against the Tsipras governments' activities pretty sharply divided.

Tsipras supporters are generally fed-up with 5yrs of blood-letting "from the Germans".

Critics, on the other hand, see the euro as some sort of abstract membership in a club that must be retained at all cost.

A minority even criticize Tsipras for—get this—being too soft.

That's especially true where I've been staying here in the port-city of Piraeus, which - being the country's biggest port, is home to mostly blue collar, working class folks where unions more or less dominate.

To illustrate the political leanings around here, I hazily recall a headline in a newsfeed summing up their worldview quite accurately: "Piraeus - a neighborhood where Syriza is not quite left-wing enough."

Enough said.

Like most locals, I've been steadily hitting the ATM for the past weeks to amass some emergency cash.

I ventured out today for the first time since the capital controls were installed yesterday to have a look around.

In Piraeus, I saw a queue of at least 30 people at a branch of Alpha Bank, and about 10 people at the Bank of Piraeus, where I waited.

The mood among the people waiting was pretty cool, friendly and even throwing a few funny comments around to address the obvious elephant in the room.

Older pensioners who were waiting, being used to getting their money from the window, had dusted off their debit card and receiv ...

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To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

gary@econintersect.com

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