Markets React to Greece

Greece rattles investor confidence to open the trading week with the indexes losing more than one percent to start the trading day. They managed to erase almost half of the losses on the day, but the bigger question, is Greece really an issue or is it the excuse to take money off the table in front of the FOMC meeting? I am going with the latter and willing to watch how this unfolds going into the announcement on Wednesday. Again, that is obvious as well with Yellen and company deciding they want to raise rate… now it is just putting all the rhetoric in place not to disturb the markets too much in the second half of the year. Worries remain the challenge mentally for investors, and lack of clarity is disturbing analyst and Wall Street. Outside of that… life is good. Maybe we can get them to do a ‘Life is Good’ t-shirt with Wall Street on it… big seller or is that plenty of buyers?

The following are some Notes of interest heading into the trading day tomorrow…

  • Yield on the ten-year treasury bond has drifted back to the 2.3% level of support. Watching how this plays out heading into the FOMC meeting… could offer a opportunity on the short side if the Fed puts the interest rate hikes in view for September meeting.
  • VIX index hit 15.5 today and that is resistance for the index. Do the buyers show up and keep the index in the lower range as it has the last two plus months? If so the short VIX trade sets up for an opportunity.
  • Small caps (IWM) teste back near the $123.75 support early and move back to $125.50 on the close. The regional banks are driving the push higher and this could play out on the upside near term. Watching the $126.50 level on the upside.
  • Oil remained below the $60 mark, but did fight back from the early selling that put the commodity at the $$58.70 mark. Still in trading range and looking for some the upside breakout… at least that is the analyst view short term. Not sure about conclusion, but a move above the $61.50 mark would bring the buyers to the table.
  • Natural gas (UNG) has rallied off the near term low of $12.50 back to $14… question is how much upside is their in the commodity? $15.20 would be the near term target on this move.
  • Cyber Security ETF (HACK) continues to push to new highs as the news continues to focus on the government and other companies being hacked. I continue to like the near term and would raise my stops to protect the gains on the move higher. Let it run…
  • Twitter (TWTR) good news last week on the shake up in leadership is bad news on Monday as analyst downgrade the stock further. This is one to watch from my view. Too much riding on the social media company going forward to believe there isn’t a solution to growth in profits.
  • Emerging markets (EEM) broke support on the day and moved lower. The short side of this trade is back in play as the bounce from last week fails.
  • China isn’t helping the emerging markets story with the break of support on Monday reconfirming the downside risk in the country ETF (FXI).
  • Europe (IEV) testing lower and support at $45. The issue with Greece is taking a toll on the sector and one to watch as it unfolds. Germany has been pushed lower as well on the saga. No solution yet, but when Greece is broke… we will know what the outcome will be.

Plenty on the plate to watch as we progress through this week of trading. Don’t assume anything and focus on the objective, risk and trend. Keep your stops in place and trade within your strategy not the news or speculation.