Greece two-step offset by positive US data

What is the old saying, “pride comes before destruction?” Reading the headlines and comments on the Greece bailout, no bailout, referendum bailout, or crowd funding bailout only worked to bring that quote to mind. The spirit of the negotiation was completely lost in the process and the end result is now chaos in the financial systems relative to Greece. Looking at the intraday chart of GREK puts in perspective the inability of the market, investors and the negotiators to decipher what was going to happen relative to a deal on the funding of a possible bailout. In the end it has been kicked to Sunday’s referendum vote and the politicians are encouraging everyone to vote ‘NO’. Maybe the old ‘Abbott and Costello’ routine of “Whose on First” would have helped Greece in the talks. Bottom line… more uncertainty about the situation until Sunday.

The US markets managed to hold on to some of the rally on the news closing up 0.5% across the averages. That keeps the support levels being tested on the S&P 500, Russell 2000, NASDAQ and the Dow indexes in place and we move to Thursday… the last trading day of the week as Friday the markets are closed. The jobs report is released tomorrow as well with the holiday… should make for an interesting news day. ISM manufacturing was in line with expectations today and Market PMI was flat. The ADP employment report was better than expected giving some optimism towards tomorrows jobs report. Overall we start the new month with some positive and tiptoe towards the long weekend.

I am not on the side of the buyers just yet… with Greece and other worries still hanging over the markets, I am not inclined to take new holdings into the long weekend. I am more than willing to let this drama with Greece takes its course, the economic data will hit full stride next week and then earnings will start. Patience is still my favorite word when it come to investing near term.

Crude oil was the big loser on the day falling 4.2% to $56.95. That is a test of the May lows and bottom end of the current trading range. Break lower here will invite the sellers to accelerate the downside near term. Why the reversal of fortunes for the commodity? Inventory data showed a rise in supplies. Rig counts for the US continues to decline. This is what I have been discussing with Iran and other countries maintaining or adding new production. Consumption is not rising… thus the rise in supply. Let this unfold on the downside and don’t assume anything near term… let everything validate or confirm the direction.

The Greece issues finally impacted the dollar on the upside with a move above resistance today. UUP cleared the $25.05 level and keeps the positive outlook for the buck in play. The euro (FXE) declined 0.9% and the outlook is for more downside if the deal  isn’t struck after the vote on Sunday with Greece. The dollar impacted the price of crude and the other commodities. Watching the ripple effect of this as well should the dollar continue to move higher near term.

Financials (XLF) gained 1.5% to recover from the selling on Monday in the banks with CB jumping 26% on a deal helping the insurance sector (KIE) gain 2.1%. Consumer staples (XLP) was one of the leading sector on the day up 1.3%. But, before you get too excited it bounce off support of $47.60 after dropping 4.7% the last month. Nonetheless it was a bounce to watch for a follow through. Consumer Discretionary (XLY) and Healthcare (XLV) both gained 1.1% on the day as well. All were positive moves, but there is still plenty of work to do if the upside for the sectors and the major indexes are to regain their upside momentum.

Taking it one day at a time patiently watching for confirmations on direction.