Monday, 29 June 2015 - AMC

Dow -350.33 at 17596.69, Nasdaq -122.04 at 4958.47, S&P -43.85 at 2057.76

Market remains in the state of uncertainty as Greece is still undergoing their negotiations with the creditors. That is why Friday session was more or less flat.

Next week is the start of July month and according to past data, this month has the largest volatility. We are going to see quite a number of market mover data next week too. Not to mention the Greece has not yet find a solution to its debt payment. The government have decided to shut all banks on Monday to prevent a bank run. (http://www.marketwatch.com/story/greek-banks-to-stay-closed-monday-2015-06-28?dist=lbeforebell) The shit is about to hit the fan soon.

Despite the coming long weekend, I am not optimistic at the moment and watch out for the volatility swing next week.

Direction for Monday 29 June, 2015: Down

With Greece stepping closer to default, more investors are selling off their positions in the equity markets to prevent themselves from exposing to the market risk. Market certainly do look bearish given the strong sell off plus the huge gap down at the opening. On top of that, we are seeing a DFDM. 

Besides Greece, we are seeing some more weakness in Asia market especially China's market. It is aware that the Shanghai Composite has went into a bearish region. Guess more s-h-i-t is loaded.   

Market Summary

Industry Watch

Strong: -

Weak: Information Technology, Financials, Materials, Consumer Discretionary, Health Care

Other Market Moving Factor:

• Greek government rejects Eurogroup's cash-for-reform proposal; Approves July 5 referendum on the issue
• Weakness in global equity markets
• Underperformance of information technology and financial sectors
• S&P 500 takes out low end of trading range it has been locked in since early April (2080-2120)
• Dow Jones Industrial Average closes below 200-day moving average

[BRIEFING.COM] Greek leaders said ‘no' to the Eurogroup's cash-for-reform proposal and investors around the world in turn said ‘no' to buying stocks on Monday. Just about every major market closed down at least 2.0%. 

The hardest-hit markets were the European bourses, which included Germany's DAX Index (-3.6%) and Spain's IBEX (-4.6%). Japan's Nikkei dropped 2.9% while China's Shanghai Composite fell 3.3% despite the People's Bank of China cutting its benchmark lending and deposit rates by 25 basis points each to 4.85% and 2.00%, respectively.

In comparison, the U.S. stock market fared reasonably well, yet that doesn't mean it did well. Hit with broad-based selling pressure, the S&P 500 declined 2.1% as buyers basically wanted no part of today's action outside a few areas of specific interest. 

One area was the utilities sector (-0.6%), which traded with a modest gain for most of the day before ultimately feeling the gravitational pull of the weak market.  Another area was the Treasury market, which attracted safe-haven flows. The 10-yr note surged more than a point and saw its yield drop 15 basis points to 2.33%.

The CBOE Volatility Index (VIX 18.85, +4.83, +34.5%), meanwhile, made a huge move as investors sought hedges to protect against downside risk. The scope of the move underscored the concerns surrounding the situation in Greece, which imposed capital controls and closed its banks, and how underappreciated the risk of getting to the point of referendum really was. 

In light of the latest developments, Standard & Poor's downgraded Greece to CCC- from CCC and said it now thought there was a 50% probability that Greece will leave the eurozone. Additionally, there was little confidence in the thought that Greece will make its EUR 1.6 billion debt payment to the IMF on Tuesday. 

Notwithstanding the latter developments, the euro reversed early losses and strung together a rally that saw it gain 0.8% against the dollar on Monday. That move, and a strong gain by the yen, pressured the U.S. Dollar Index, which fell 0.6% to 94.87. 

The weaker dollar, however, did not help oil prices, which declined 2.3% to $58.32 per barrel as demand concerns tied to the macro situation took root. 

In the stock market, the financial sector (-2.4%) got hit the hardest as Greek contagion concerns and a flatter yield curve got the better of the sector, which had been outperforming in recent weeks on curve steepening and the thinking Greece and its creditors would strike an eleventh-hour solution. Misery of course loves company and the financial sector had plenty of it. Tagging along for the joyless ride were the materials (-2.4%), health care (-2.3%), consumer discretionary (-2.3%), and information technology (-2.2%) sectors, but every sector was down for the day. 

Every stock in the Dow Jones Industrial Average lost ground, too, but none more so than Goldman Sachs (GS 207.65, -5.52), which happens to be the highest-priced stock in the price-weighted average. With Monday's retreat, the Dow Jones Industrial Average fell below its 200-day moving average. The S&P 500 did not, but stands less than 10 points above that key line of technical support after closing on its lows and turning negative for the year (-0.1%). 

The only economic release today was the Pending Home Sales report for May. Keeping with the theme of the day, it disappointed with a 0.9% increase (Briefing.com consensus +1.4%). 

Volume was heavier-than-average with 853 million shares changing hands at the NYSE where decliners outpaced advancers by a 10-to-1 margin. In turn, volume in the SPDR S&P 500 ETF Trust (SPY 205.47, -4.35) was the heaviest it has been (185.7 million) since April 17.  

Turning our attention to Tuesday, headlines out of Greece will continue to hold sway, but it will be the response around the globe to Monday's equity market losses that will be the focal point. U.S. data will include the Case-Shiller 20-City Home Price Index for April (Briefing.com consensus +5.6%; prior +5.0%), the Chicago PMI for June (Briefing.com consensus 50.0; prior 46.2), and the June Consumer Confidence report (Briefing.com consensus 97.5; prior 95.4).

Global Market

ASIA

Asian Markets Close: Japan’s Nikkei -2.9%; Hong Kong’s Hang Seng -2.6%; China’s Shanghai Composite -3.3%
Markets in the Asia-Pacific region ended lower on Monday, with the Shanghai (-3.3%) took center stage in the region, after the PBOC cut its 1-yr lending rate by 25bps to 4.85% (and a 50bp cut to the RRR to a handful of banks), over the weekend, in an effort to help contain the volatility in the major Mainland indexes. The move seemed to have worked initially, with the Shanghai opening up over 2% and managing to trade there in the early part of the day. But, the global sentiment left too sour of a taste in traders’ mouths and sellers began to take over heading into the lunch break. By the end of the session, stocks had fallen over 3%, and officially put all major Chinese indices into “bear” territory. Japanese shares were torched in response to the negativity seen in the broader markets and the strength in the yen as a flight to safety play.

Economic data

• Japan
• May Prelim Industrial Prod: -2.2% vs -0.8% exp
• May Retail Sales: +1.7% vs +1.0% exp
• China
• May Industrial Profits: +0.6% vs +2.6% in May 2014

Equity Markets

• Japan’s Nikkei declined 2.9% with the yen showing relative strength versus the dollar. Alll sectors closed in negative territory, with Utilities (-1.7%) performing better than the broad markets. IT and Healthcare were both laggards, both finishing 3.5% lower.
• Hong Kong’s Hang Seng declined 2.6%, trading in sympathy with the beating mainland shares took. Broad-based losses were paced by the energy (-2.2%), consumer cyclical (-1.8%), and financial (-1.7%) sectors. The biggest laggards were China Resources Power Holdings (-5.1%), China Unicom Hong Kong (-4.9%), and Tingyi Cayman Islands Holdings (-4.1%).
• China’s Shanghai Composite plummeted 3.3%, and officially put the index into bear market territory (down ~21% from the highs). The sharp decline came on a day that started off strong following the PBOC rate cuts, but global sentinment weighed on shares. China Southern Airways traded down 7%, but a few banks helped financials stay afloat with China Minsheng Bank gaining 3.6% and Bank of China up 0.7%.
• India’s Sensex declined 0.6%, held back by weakness in the indexes top loser, Tech Mahindra, down over 7%. Out of the 30 stocks in the Sensex, 24 ended the day in negative territory.

FX

• USD/CNY -0.01% at 6.2090
• USD/INR +0.3% at 63.88
• USD/JPY -0.7% at 122.88

EUROPE

Worries about Greek Situation Weighing Heavily on European Markets
The eleventh-hour solution between Greece and its creditors has not been reached. Over the weekend, Greek leaders rejected the latest cash-for-reform proposal from the Eurogroup. In doing so, the possibility of Greece defaulting on its debt payments and exiting the eurozone was increased. That concern is readily apparent in Greek debt as the yield on Greece’s 10-yr note has surged 372 basis points to 14.39%.

The concerns are also readily apparent in major equity markets around the globe, most of which have fallen at least 2.5%, including Japan’s Nikkei (-2.9%), China’s Shanghai Composite (-3.3%), Germany’s DAX Index (-3.3%), France’s CAC 40 (-3.6%), and Spain’s IBEX (-3.8%). The U.S. market is slated to open noticeably lower, although it is expected to exhibit some relative strength based on the S&P futures which are trading 1.0% below fair value.

With respect to Greece, the current position on things is as follows:

• Greece’s parliament has approved a July 5 referendum in which Greek citizens will vote on whether to accept or reject the Eurogroup’s cash-for-reform proposal
• Capital controls were imposed and include a €60 daily withdrawal limit from ATMs and a ban on transfers and payments outside the country
• Greek banks and the stock market will be closed until July 6
• In the wake of the Greek government’s rejection of the bailout proposal, the European Central Bank is maintaining the ceiling to the provision of emergency liquidity assistance to Greek banks at the level decided on June 26

Closing Prices

• UK’s FTSE: -2.0%
• Germany’s DAX: -3.6%
• France’s CAC: -3.7%
• Spain’s IBEX: -4.6%
• Portugal’s PSI: -5.2%
• Italy’s MIB Index: -5.2%
• Irish Ovrl Index: -2.5%
• Greece ASE General Index: Closed

Macroeconomic Data

Economic Data

from Briefing.com

• Pending Home Sales : 0.9% vs 1.4% (Prior 2.7% - Down)

Market Internals

NYSE:

Lower Volumes than the day before – 875.2M vs 1623.8M 


Decliners outpaced Advancers (adv/dec): 288 / 2883

New Lows outpaced New Highs (highs/lows): 20 / 330

NASDAQ:

Lower Volumes than the day before – 2008.2M vs 2751.0M

Decliners outpaced Advancers (adv/dec): 390 / 2488

New Lows outpaced New Highs (highs/lows): 52 / 150

VOLATILITY S&P500 (VIX)
18.85 +4.83 (+34.45%)

The bears are overwhelming and internals are extremely bearish. VIX opened with a huge gap up and took a large spike, reflecting a drastic increase in volatility and fear in the market. It is more or less confirmed that market is definitely in a bearish mode now. Now the resistance level would be around 21.00 level and if VIX is going there, I reckon it would be an extreme fear which translate to even more sell-off...        

Technical Updates

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)

17,596.35 -350.33 (-1.95%)

Volume: 116,337,391 (above average of 95,686,292)
Range: 17,590.55 - 17,936.74

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)

4,958.47 -122.04 (-2.40%)
Volume: 490.4M (above average of 430,295,981)

Range: 4,956.23 - 5,051.01

S&P 500 INDEX (SPX: CBOE)

2,057.64 -43.85 (-2.09%)

Volume: 587.0M (above average of 515,986,297)

Range: 2,056.64 - 2,098.63 

DOW broke below its support level at around 17,750 level and 200MA, while sitting above another support at 17,600 now. NASDAQ broke below its 100MA and sit above its channel as a support. S&P broke out of its channel and went below its support level at around 2,075 level. It seems that the market is likely to break away from its consolidation range with more correction.

Commodities

Closing Commodities: Greece Helps Weigh On Oil Prices, Copper Ends Flat

• The dollar index slid lower today, but this didn’t provide much upside to commodities.
• Crude oil traded in the red all day, helped by Greece news.
• Aug crude oil ended the day -$1.35 to $58.32/barrel. Aug natural gas rose $0.04 to $2.81/MMBtu
• Metals were mixed/mostly flat to given the action in the Greece/ dollar index.
• Aug gold ended today’s floor trading session $5.90 lower to $1179.10/oz.
• July silver lost $0.07 to $15.70/oz and July copper ended unchanged at $2.63/lb.

Energy

• August crude oil futures fell $1.35 to $58.32/barrel
• August natural gas closed $0.04 higher at $2.81/MMBtu
• RBOB Gasoline closed $0.02 lower at $2.00/gallon
• Heating oil futures closed $0.03 lower to $1.84/gallon

Agriculture

• July corn closed $0.01 lower at $3.84/bushel
• September wheat closed $0.18 higher at $5.84/bushel
• November soybeans closed $0.03 lower to $9.81/bushel
• Ethanol closed $0.02 lower at $1.56/gallon
• Sugar #11 closed 0.15 cents higher to 11.82 cents/lb

• The USDA is set to release two grain reports tomorrow at Noon ET, which have the potential to increase volatility across the agricultural commodity spectrum

Metals

• August gold ended today’s session $5.90 higher at $1179.10/oz
• September silver closed $0.07 lower at $15.70/oz
• September copper closed flat at $2.63/lb

Currencies

Dollar Falls Sharply Despite Greek Woes

• The greenback and the loonie were the losers in foreign exchange markets today as overnight knee-jerk selling in the euro was steadily reversed
  • U.S. Dollar Index: -0.72% to 94.78
• EUR/USD: +0.77% to $1.1254
  • German CPI for June missed expectations, falling 0.1% m/m versus a 0.1% gain in May
  • Spain's Harmonized Index of Consumer Prices was flat y/y in June, beating expectations and a 0.3% fall in May
  • The eurozone's Business and Consumer Survey fell to a worse-than-expected 103.5 in June from 103.8 in May
• GBP/USD: +0.01% to $1.5749
  • Mortgage approvals declined to a worse-than-expected 64.43K in May versus 67.58K in April
• USD/CAD: +0.52% to 1.2383
  • The Raw Materials Price Index rose to a worse-than-expected 4.4% m/m in May versus 4.0% for April
• USD/JPY: -1.13% to 122.48
  • Industrial Production missed estimates in May, falling 2.2% m/m versus a 1.2% jump in April
  • Retail Sales rose 3.0% m/m in May, better than estimates but worse than the 4.9% reading in April
• USD/CHF: -0.84% 0.9256
  • The Swiss National Bank intervened in the fx market to prevent significant appreciation of the Swissy after the Greek negotiations fell through at the weekend
• AUD/USD: +0.51% to 0.7697
• NZD/USD: +0.27% to 0.6867

Bonds

Yields Plummet on Flight to Quality

• U.S. Treasuries soared today after investors scrambled to safety following the breakdown of negotiation between Greece and its creditors over the weekend. A referendum on a bailout extension is to be voted upon on July 5th, but that will be after the June 30th deadline for Greece's 1.55 mln euro payment to the IMF
• Yield Check:
  • 2-yr: -7 bps to 0.64%
  • 5-yr: -13 bps to 1.63%
  • 10-yr: -14 bps to 2.33%
  • 30-yr: -14 bps to 3.10%

• News:
  • Negotiations between Greece and its official creditors broke down over the weekend
    • Prime Minister Alexis Tsipras decided to hold a referendum on July 5th to let Greeks decide if they want to stay in the eurozone at the expense of pension and cuts and no debt forgiveness
    • If Greece doesn't make its 1.55 bln euro payment to the IMF on June 30th, IMF Managing Director Christine Lagarde has the option of not reporting the missed payment to the executive board for a month. She has indicated that she will not delay
    • Greek banks did not open on Monday and ATMs allowed only $60 of withdrawals per depositor per day. The banks are supposed to reopen on Thursday
    • S&P downgraded Greece from CCC to CCC- and said that the probability of Grexit is 50%
  • The Shanghai Composite fell to bear market territory overnight, down more than 20% from its high on June 12th. The PBoC eased monetary policy over the weekend to stem the selling, but the major indices still declined
  • Pending Home Sales in the U.S. rose 0.9% in May, short of the Briefing.com consensus of 1.4% and April's gain of 3.4%
    • That was the highest level of sales since mid-2006
  • Puerto Rico's governor announced that the commonwealth its $72 bln of debt because the burden is currently unsustainable

• Commodities:
  • WTI crude: -2.23% to $58.30/bbl.
  • Gold: +0.48% to $1,178.90/troy oz.
  • Copper: -0.15% to $2.6315/lb.

• Currencies:
  • EUR/USD: +0.66% to $1.1241
  • USD/JPY: -1.07% to 122.57

• Data out Tuesday:
  • April Case-Shiller 20-City Index (09:00 ET)
  • June Chicago PMI (09:45 ET)
  • June Consumer Confidence (10:00 ET)
• Fed Speaker:
  • St. Louis Fed President Bullard (non-FOMC voter) (18:00 ET)

Treasury Yields:

• 2 Year Note 0.64% -0.08
• 5 Year Note 1.62% -0.13
• 10 Year Note 2.33% -0.16
• 30 Year Bond 3.09% -0.16

2/30 Spread: 245 bps ( -8 ) …  2/10 Spread: 169 bps ( -8 )

Preview for Tuesday 30 June, 2015

Economic Data

Tuesday (30 June) :

• Case-Shiller 20-city Index : 5.6% (Prior 5.0%)
• Chicago PMI : 50.0 (Prior 46.2)
• Consumer Confidence : 97.5 (Prior 95.4)

Earnings Highlights

Tuesday (30 June) :
BMO - CAG OMN SCHN
AMC - AVAV CAMP

Summary
With China and Greece crisis looming, like I mentioned previously that most investors are taking risk off from the equity market and it is noticeable from the lowering in yield curve. As we are seeing more economic data from China and the Eurozone, that might trigger more selling in the market. Also, Greece's debt payment is due soon and if they are not going to settle on any agreement, Grexit is only a matter of time.

The indices are approaching the 200MA as a support, and that might give us some pullback. But given the raging momentum, it is going to be hard. 

Direction for Tuesday 30 June, 2015: Down

2015 Daily Directional Accuracy: 57/98 (58.16%) 

2015 Weekly Directional Accuracy: 14/23 (60.87%)

Friday, 26 June 2015 - AMC

Dow +56.66 at 17947.02, Nasdaq -31.68 at 5080.51, S&P -0.70 at 2101.61

The Greece debt saga is going to drag the market until an agreement is met, perhaps with more profit taking. There is not much bullishness in the market now. For tomorrow, I am looking to see whether the support is going to hold. If it does, we should see a higher low which is likely to see an upside next week.

Direction for Friday 26 June, 2015: Down

Market was rather bearish on Friday. DOW managed to stay positive while NASDAQ and S&P ended with losses. As Greece could not settle on any agreement and default on their payment seems to be imminent, things just get much worse. As a result, we are seeing a rise in the Dollar Index and this has some effect on crude oil too. With dollar getting stronger, price of crude oil might take a toll.   

Market Summary

Industry Watch

Strong: Consumer Discretionary, Consumer Staples, Financials, Industrials

Weak: Energy, Technology, Utilities

Other Market Moving Factor:

• Greece remains without a debt deal as June 30 payment to the International Monetary Fund looms
• Disappointing guidance from Micron (MU) weighs on high-beta chipmakers

[BRIEFING.COM] The stock market ended the week on a mixed note with the Dow Jones Industrial Average (+0.3%) posting a modest gain while the Nasdaq Composite (-0.6%) spent the day in negative territory. For its part, the S&P 500 ended flat, locking in a 0.4% decline for the week to end ahead of the Nasdaq (-0.7% week-to-date).  

To little surprise, the trading day began with more rhetoric but little tangible progress between Greek leaders and the country's creditors. With that in mind, the talks are set to enter the eleventh hour with both sides sticking to their own proposals. This morning, Germany's Handelsblatt reported that creditors have offered Greece EUR15.50 billion in bailout funds over the next five months if Greek representatives can agree to the requested reforms; however, that offer was turned down by the Greek delegation. European markets appeared unconcerned with the lack of progress as France's CAC, Germany's DAX, and Italy's MIB spiked between 4.0% and 4.8% for the week. Not to be outdone, Greece's Athens General Composite surged 13.8% for the week, returning into the middle of this year's range. 

Domestically, investors appeared to suffer from a case of Grexhaustion, showing little concern about the possibility of a Graccident as it now becomes imperative to reach a deal on Saturday if Greece is to make the June 30 debt payment to the International Monetary Fund. Failing to meet that deadline would put the ‘Grexit' talk back on the table. That being said, U.S. Treasuries retreated into the afternoon with the 10-yr yield spiking eight basis points to 2.48%. Also of note, selling in the long bond ran the 30-yr yield higher by ten basis points to 3.25%, representing the highest level since September.  

Six of ten sectors registered gains, but daylong weakness in the technology sector (-0.8%) was today's main story and the primary reason for Nasdaq's underperformance. Specifically, it was the high-beta chipmaker industry group that suffered from widespread losses after Micron (MU 19.66, -4.36) reported disappointing results and issued uninspiring guidance. Shares of MU plunged 18.2% to levels not seen since late 2013 while the PHLX Semiconductor Index lost 2.4% with all 30 components ending in the red. 

That significant weakness weighed on the technology sector while the Nasdaq also had to contend with losses among biotechnology names. The iShares Nasdaq Biotechnology ETF (IBB 372.70, -3.13) lost 0.8% while the health care sector (-0.1%) spent the day near its flat line with hospital names offsetting the weakness in biotechnology. 

Similar to the health care sector, the S&P 500 spent the day near its unchanged level. The index benefited from relative strength in just about every sector other than technology. Most notably, financials (+0.3%), consumer discretionary (+0.4%), and industrials (+0.2%) kept the benchmark index little changed throughout the day.  

Of the three influential groups, the discretionary sector was underpinned by apparel retailers after Finish Line (FINL 28.25, +1.25) and Dow component Nike (NKE 109.71, +4.49) reported better than expected results. The two names gained 4.6% and 4.3%, respectively.  

Elsewhere, the industrial sector rallied behind Deere (DE 96.44, +3.04), which spiked 3.3%, breaking out to a four-year high. There was no news to account for the move and other manufacturers of heavy machinery ended little changed. As for transport stocks, the Dow Jones Transportation Average (+0.1%) eked out a slim gain for the day, but not before notching a fresh eight-month low during morning action.  

Today's participation was well above average as rebalancing of the Russell indices led to increased churn. As a result, nearly two billion shares changed hands at the NYSE floor.

Economic data was limited to the final reading of the Michigan Sentiment Index for June, which was revised up to 96.1 from a preliminary reading of 94.6 while the Briefing.com consensus expected no change. The June reading was up from 90.7 in May, representing the highest level for the index since hitting 98.1 in January.  

Monday's data will be limited to the 10:00 ET release of the Pending Home Sales report for May. 

• Nasdaq Composite +6.8% YTD
• Russell 2000 +5.9% YTD 
• S&P 500 +2.0% YTD 
• Dow Jones Industrial Average +0.7% YTD 

Week in Review: All Eyes Remain on Greece 

The stock market opened the trading week on a higher note with the Dow and S&P 500 gaining 0.6% apiece while the Nasdaq Composite (+0.7%) outperformed. Equity indices spent the entire Monday session in the green with investor sentiment receiving a boost from reports indicating Greek officials submitted a new proposal to the Eurogroup. However, regional officials did not share the market's optimism with Germany's Finance Minister Wolfgang Schaeuble saying he does not see anything new in the proposal. The developments pressured global bonds with Germany's 10-yr bund yield spiking 12 basis points to 0.88%. Similarly, the U.S. 10-yr note retreated throughout the day, sending its yield higher by ten basis points to 2.36%. Some of the outflows from the Treasury market made their way into equities as nine of ten sectors posted gains while the rate-sensitive utilities sector (-0.1%) was pressured by the increase in yields.  

The major averages ended Tuesday on a modestly higher note after spending the bulk of the day near their flat lines. The S&P 500 added 0.1% after trading inside an eight-point range. Equity indices held modest gains at the start amid continued optimism that Greece will be able to come to terms with its creditors. In addition, better than expected Manufacturing (52.5; consensus 52.2) and Services PMI (54.4; consensus 53.6) readings for the eurozone contributed to the upbeat sentiment overseas. Once the U.S. session got underway, the S&P 500 held a four-point gain, but surrendered that advance just one hour into the session as heavily-weighted sectors like technology (unch), industrials (-0.2%), and consumer staples (-0.5%) weighed. The top-weighted technology sector was able to erase the majority of its loss before the final hour, but chipmakers struggled into the afternoon. The PHLX Semiconductor Index lost 0.6% with all but six components ending in the red. 

The stock market ended the midweek session on a broadly lower note with the S&P 500 losing 0.7% and turning negative for the week (-0.1%). Equity indices began the day with slim losses after the International Monetary Fund rejected Greece's restructuring proposal, putting the two sides back at square one. According to Greek Prime Minister Alexis Tsipras, this was the first time the IMF did not accept equivalent fiscal measures proposed by Greek officials. Interestingly, the market appeared to be on the comeback trail during the opening hour with the S&P 500 making a brief appearance in the green; however, the index reversed into the red shortly after activist investor Carl Icahn shared his thoughts on the market as part of an appearance on CNBC. During his interview, Mr. Icahn said he believes the market is "extremely overheated," pointing to high-yield bonds in particular.  

The market registered its second consecutive decline on Thursday with the S&P 500 (-0.3%) sliding below its 50-day moving average (2,107). The benchmark index held a modest gain through the morning, but relative weakness among several influential sectors pulled the S&P 500 into negative territory during afternoon action. Stocks began the day with slim gains, but retreated from their opening levels during the initial hour amid reports the Eurogroup meeting was suspended to give the Greek delegation time to submit a better proposal to the creditors. The market dipped from its opening levels in reaction, but was able to briefly extend to a fresh session high with the health care (+0.5%) sector driving the move after the Supreme Court upheld federal subsidies to the Affordable Care Act. Hospital names benefited from the news with the likes of Tenet Healthcare (THC 56.21, +6.13), HCA (HCA 90.72, +7.35), and Universal Health (UHS 140.82, +10.14) spiking between 7.8% and 12.2%. Also in the health care sector, insurer Humana (HUM 197.37, +13.14) surged during the afternoon and ended higher by 7.1% after Bloomberg reported the company received a takeover offer from Aetna (AET 132.60, +5.09).

Global Market

ASIA

Asian Markets Close: Japan’s Nikkei -0.3%; Hong Kong’s Hang Seng -1.8%; China’s Shanghai Composite -7.4%
Markets in the Asia-Pacific region ended mostly lower on Friday, having been pulled down in sympathy with the rout in the Shanghai Composite, which plummeted 7.4% on no specific news. The sharp decline there was generally attributed to investor skittishness and deleveraging activity following the parabolic rise of the Chinese stock market.

Economic data

• Japan
• May Household Spending +2.4% month-over-month (expected +2.2%; prior -5.5%); +4.8% year-over-year (expected +3.4%; prior -1.3%)
• May National CPI +0.5% year-over-year (expected +0.4%; prior +0.6%)
• May National Core CPI +0.1% year-over-year (expected 0.0%; prior +0.3%)
• May Unemployment Rate 3.3% (expected 3.3%; prior 3.3%)
• Singapore
• May Industrial Production +2.4% month-over-month (expected +1.5%; prior -5.8%); -2.3% year-over-year (expected -2.1%; prior -8.7%)

Equity Markets

• Japan’s Nikkei declined 0.3% in spite of some encouraging household spending data. The energy (-2.7%), communications (-1.0%), utilities (-1.0%), and industrial (-0.8%) sectors were the weakest areas. Showa Shell Sekiyu (-5.0%), Toyobo (-4.8%), and Yamato Holdings (-3.6%) led declining issues. Shinsei Bank (+4.1%) was the best-performing stock. Out of the 225 index members, 70 ended higher, 146 finished lower, and 9 were unchanged. For the week, the Nikkei increased 2.6%.
• Hong Kong’s Hang Seng declined 1.8%, trading in sympathy with the beating mainland shares took. Broad-based losses were paced by the energy (-2.2%), consumer cyclical (-1.8%), and financial (-1.7%) sectors. The biggest laggards were China Resources Power Holdings (-5.1%), China Unicom Hong Kong (-4.9%), and Tingyi Cayman Islands Holdings (-4.1%). Lenovo Group (0.0%), which finished unchanged, was the only stock that didn’t suffer a loss. Out of the 50 index members, 0 ended higher, 49 finished lower, and 1 was unchanged. For the week, the Hang Seng declined 0.4%.
• China’s Shanghai Composite plummeted 7.4%, experiencing its biggest one-day loss in five months. The sharp decline came on a day that Guotai Junan Securities, the country’s third most profitable brokerage firm, soared 44% in its debut as a publicly-traded company. Reports attributed the sell-off to deleveraging of margin accounts, worries about excess supply from new share listings, and momentum cutting the other way for weak-handed holders of stocks. For the week, the Shanghai Composite declined 6.4%. Over the last two weeks, the Shanghai Composite has dropped 18.8%.
• India’s Sensex declined 0.3%, held back by weakness in the communications (-2.1%), utilities (-2.0%), and industrial (-1.7%) sectors. Out of the 30 index members, 16 ended higher and 14 finished lower. For the week, the Sensex increased 1.8%.
• Australia’s S&P/ASX 200 declined 1.5%, led by losses in the utilities (-4.1%), resources (-3.2%), and energy (-3.2%) sectors. Bradken (-11.3%) led all decliners while Woolworths (+3.8%) topped the list of winners. For the week, the S&P/ASX 200 declined 0.9%.
• Regional advancers: South Korea +0.3%, Indonesia +0.1%, Philippines +0.5%
• Regional decliners: Taiwan -0.2%, Malaysia -0.4%, Singapore -0.9%, Thailand -0.2%, Vietnam -1.1%

FX

• USD/CNY -0.01% at 6.2090
• USD/INR +0.1% at 63.608
• USD/JPY -0.2% at 123.39

EUROPE

Major European indices trade in mixed fashion with UK’s FTSE (-0.5%) trailing the region while France’s CAC (+0.4%) outperforms. Recent reports from Handelsblatt indicate European creditors have offered Greece EUR15.50 billion in bailout funds over the next five months if Greek representatives can agree to the requested reforms

• Eurozone May Private Sector Loans +0.5% year-over-year (expected 0.4%; prior 0.0%) while May M3 Money Supply +5.0% year-over-year (consensus 5.4%; last 5.3%)
• Germany’s May Import Price Index -0.2% month-over-month (expected 0.1%; prior 0.6%); -0.8% year-over-year (expected -0.4%; last -0.6%)
• France’s Consumer Confidence held at 94 (expected 93)
• Italy’s June Business Confidence rose to 103.9 from 103.4 (consensus 103.8) while Consumer Confidence improved to 109.5 from 106.0 (expected 105.7)

Closing Prices

• UK’s FTSE: -0.8%
• Germany’s DAX: + 0.2%
• France’s CAC: + 0.4%
• Spain’s IBEX: + 0.7%
• Portugal’s PSI: + 0.3%
• Italy’s MIB Index: + 0.7%
• Irish Ovrl Index: + 0.4%
• Greece ASE General Index: + 2.0%

Macroeconomic Data

Economic Data

from Briefing.com

• Michigan Sentiment - Final : 96.1 vs 94.8 (Prior 94.6)

MICHIGAN SENTIMENT


Highlights

• The University of Michigan Consumer Sentiment Index was revised up to 96.1 in the final June reading from a preliminary reading of 94.6. That is up from a reading of 90.7 in May. The Briefing.com Consensus expected the Consumer Sentiment Index to remain at 94.6.

Key Factors

• That was the best reading since the Consumer Sentiment Index reached 98.1 in January.
• The gain in sentiment was likely a reaction to large improvements in labor market conditions. That offset concerns about higher gasoline prices.
• The Expectations Index increased to 87.8 in June from 84.2 in May. The Current Conditions Index increased to 108.9 from 100.8.
• Gains in consumers sentiment do not necessarily translate into consumption growth. Consumption relies on income growth. As long as income continues to push higher, consumption growth should follow.

Big Picture

• Consumer sentiment has little influence on consumption. As long as payroll levels continue to expand, the resulting income growth should keep consumption gains steady regardless of the monthly ebbs and flows in sentiment.

Market Internals

NYSE:

Higher Volumes than the day before – 1623.8M vs 773.8M 


Decliners outpaced Advancers (adv/dec): 1343 / 1764

New Lows outpaced New Highs (highs/lows): 86 / 199

NASDAQ:

Higher Volumes than the day before – 2751.0M vs 1598.6M

Decliners outpaced Advancers (adv/dec): 1168 / 1661

New Highs outpaced New Highs (highs/lows): 139 / 76

VOLATILITY S&P500 (VIX)
14.02 +0.01 (+0.07%)

Internals still reflect a bearish sentiment, especially with New Lows continue to spike up. Volume increases as a result from rebalancing of the Russell indices. VIX did not break above its 100 MA but it manages to sit above its 20/50 MAs. This shows the uncertainty in the market amid the lack of confidence.    

Technical Updates

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)

17,946.68 +56.32 (+0.31%)

Volume: 158,115,783 (above average of 95,497,082)
Range: 17,892.03 - 18,013.15

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)

5,080.51 -31.68 (-0.62%)
Volume: 1,251,422,507 (above average of 430,132,278)

Range: 5,060.82 - 5,121.47

S&P 500 INDEX (SPX: CBOE)

2,101.49 -0.82 (-0.04%)

Volume: 927,539,000 (above average of 515,643,277)

Range: 2,095.38 - 2,108.92 

DOW did not go below yesterday low but it is held below by its trend line and 100MA. NASDAQ broke below its support level and sit above its 50MA. S&P remains relatively unchanged at the intersection between its trend support and channel while sitting on its 100MA. I think that we might see a pullback in the market.

Commodities

Closing Commodities: WTI Crude Closes Below $60/Barrel

• WTI crude oil futures end lower again, however, today’s loss was very small.
• Overall, energy futures ended the day mostly lower with oil, natural gas and RBOB gasoline all declining and heating oil rallying.
• Aug crude oil fell $0.06 today to $59.67/barrel, while Aug natural gas fell $0.08 to $2.77/MMBtu’
• Note: Use the August contract for front-month natural gas
• Aug gold finished today’s session $1.40 higher at $1173.20/oz and July silver fell $0.07 to $15.73/oz
• July copper gained $0.03 today to $2.65/lb

Energy

• August crude oil futures fell $0.06 to $59.67/barrel
• August natural gas closed $0.08 lower at $2.77/MMBtu
• RBOB Gasoline closed $0.14 lower at $1.87/gallon
• Heating oil futures closed $0.15 higher to $2.02/gallon

• The Baker Hughes total US rig count increased by 2 to 859, marking the first week of increases after 28 consecutive weeks of decline

Agriculture

• July corn closed $0.08 higher at $3.85/bushel
• September wheat closed $0.27 higher (+5%) at $5.66/bushel
• November soybeans closed $0.08 higher to $9.84/bushel
• Ethanol closed $0.02 higher at $1.58/gallon
• Sugar #11 closed 0.15 cents higher to 11.67 cents/lb

Metals

• August gold ended today’s session $1.40 higher at $1173.20/oz
• July silver closed $0.07 lower at $15.73/oz
• July copper closed f$0.03 higher at $2.65/lb

Currencies

Dollar Gains Broadly

• The greenback climbed against all of the majors today except the Swiss franc as investors sought a safe haven from the uncertainty in the eurozone
  • The Michigan Sentiment survey for June moved up to 96.1, ahead of the Briefing.com consensus of 94.6 and the reading from May which was also 94.6
  • U.S. Dollar Index: +0.32% to 95.49
• GBP/USD: -0.16% to $1.5723
• EUR/USD: -0.43% to $1.1158
  • Greek Prime Minister Alexis Tsipras went home to Athens after declining a 5-month extension which Syriza politicians said would only prolong Greece's depression
  • The delegations from Greece and its official creditors will continue to meet over the weekend
  • Again, there remains a "door number 3" because Christine Lagarde, the managing director of the IMF, has 1 month to report to its board that Greece failed to make a payment
• USD/JPY: +0.26% to 123.89
  • The pair rallied on higher Treasury yields, which makes the long side of $/Yen more attractive to carry traders
  • Core CPI for Japan grew 0.1% y/y in May, higher than expected
  • Japanese household spending grew 4.8% y/y
• USD/CHF: -0.09% to 0.9358
  • The Swissy rallied on safe-haven demand
• USD/CAD: -0.02% to 1.2328
• AUD/USD: -1.14% to $0.7649
• NZD/USD: -0.85% to $0.6837

Bonds

9-Month High for Bond Yield

• U.S. government debt declined today in a curve-steepening trade as Greek woes and a declining Nasdaq failed to generate buying interest. While the final revision to the Michigan Consumer Sentiment survey was better than expected, that hardly warranted a 6 bp jump in the 10-year note yield. This move was more likely just a continuation of the repricing in yields that has been happening since April
• Yield Check:
  • 2-yr: +2 bps to 0.70%
  • 5-yr: +5 bps to 1.75%
  • 10-yr: +6 bps to 2.48%
  • 30-yr: +7 bps to 3.25%

• News:
  • The University of Michigan Consumer Sentiment Index was revised up to 96.1 in the final June reading from a preliminary reading of 94.6. That is up from a reading of 90.7 in May. The Briefing.com Consensus expected the Consumer Sentiment Index to remain at 94.6
    • That was the best reading since the Consumer Sentiment Index reached 98.1 in January
    • The gain in sentiment was likely a reaction to large improvements in labor market conditions. That offset concerns about higher gasoline prices.
    • Spending trends follow income and not sentiment
  • Greek Prime Minister Alexis Tsipras turned down a 5-month extension from Greece's official creditors and returned home to Athens
    • Discussions will continue over the weekend. One person, cited by The Guardian, put the chance of a weekend agreement over 50%
      • The same person was not so certain about Greek parliamentary approval of any agreement
  • The Shanghai Composite lost more than 7% overnight

• Commodities:
  • WTI Crude: -0.23% to $59.56/bbl.
  • Gold: +0.19% to $1,174.0/troy oz.
  • Copper: +0.76% to $2.6425/lb.

• Currencies:
  • EUR/USD: -0.33% to $1.1167
  • USD/JPY: +0.20% to 123.82

• Week Ahead:
  • Monday: May Pending Home Sales (10:00 ET)
  • Tuesday: April Case-Shiller 20-City Index (09:00 ET); June Chicago PMI (09:45 ET); June Consumer Confidence (10:00 ET); St. Louis Fed President Bullard (non-FOMC voter) (18:00 ET)
  • Wednesday: MBA Mortgage Index for the week ending 6/27 (07:00 ET); June Challenger Job Cuts (07:30 ET); June ADP Employment Change (08:15 ET); June ISM Index (10:00 ET); May Construction Spending (10:00 ET); Crude Inventories for the week ending 6/27 (10:30 ET); June Auto and Truck Sales (17:00 ET)
  • Thursday: Initial Jobless Claims for the week ending 6/27 and Continuing Jobless Claims for the week ending 6/20; June Employment Situation Report (08:30 ET); May Factory Orders (10:00 ET); Natural Gas Inventories for the week ending 6/27 (10:30 ET)

Treasury Yields:

• 2 Year Note 0.72% +0.04
• 5 Year Note 1.75% +0.05
• 10 Year Note 2.49% +0.09
• 30 Year Bond 3.25% +0.09

2/30 Spread: 253 bps ( +5 ) …  2/10 Spread: 177 bps ( +5 )

Preview for the week Monday 29 June to Friday 3 July, 2015

Economic Data

Monday (29 June) :

• Pending Home Sales : 1.4% (Prior 3.4%)

Tuesday (30 June) :

• Case-Shiller 20-city Index : 5.6% (Prior 5.0%)
• Chicago PMI : 50.0 (Prior 46.2)
• Consumer Confidence : 97.5 (Prior 95.4)

Wednesday (1 July) :

• MBA Mortgage Index : (Prior 1.6%)
• Challenger Job Cuts : (Prior -22.5%) 
• ADP Employment Change : 220K (Prior 201K)
• ISM Index : 53.2 (Prior 52.8)
• Construction Spending : 0.2% (Prior 2.2%)
• Crude Inventories : (Prior -4.934M)  
• Auto Sales : (Prior 5.9M)
• Truck Sales : (Prior 8.4M)

Thursday (2 July) :

• Initial Claims : 270K (Prior 271K)
• Continuing Claims : 2231K (Prior 2247K)
• Nonfarm Payrolls : 230K (Prior 280K)
• Nonfarm Private Payrolls : 225K (Prior 262K)
• Unemployment Rate : 5.4% (Prior 5.5%)
• Hourly Earnings : 0.2% (Prior 0.3%)
• Average Workweek : 34.5 (Prior 34.5)
• Factory Orders : 0.2% (Prior -0.4%)
• Natural Gas Inventories : (Prior 75 bcf)

Friday (3 July) : Independence Day - Market Closed

• No Economic Data

Earnings Highlights

Monday (29 June) :
BMO - None Scheduled
AMC - ANFI APOL HELI IRET

Tuesday (30 June) :
BMO - CAG OMN SCHN
AMC - AVAV CAMP

Wednesday (1 July) :
BMO - AYI AZZ BSET STZ GIS GBX MKC PAYX UNF
AMC - AYA FC GLPW PRGS

Thursday (2 July) :
BMO - ISCA
AMC - None Scheduled

Friday (3 July) : Independence Day - Market Closed
BMO - None Scheduled
AMC - None Scheduled

Summary
Market remains in the state of uncertainty as Greece is still undergoing their negotiations with the creditors. That is why Friday session was more or less flat.

Next week is the start of July month and according to past data, this month has the largest volatility. We are going to see quite a number of market mover data next week too. Not to mention the Greece has not yet find a solution to its debt payment. The government have decided to shut all banks on Monday to prevent a bank run. (http://www.marketwatch.com/story/greek-banks-to-stay-closed-monday-2015-06-28?dist=lbeforebell) The shit is about to hit the fan soon.

Despite the coming long weekend, I am not optimistic at the moment and watch out for the volatility swing next week.

Direction for Monday 29 June, 2015: Down

Direction for the week Monday 29 June to Friday 3 July, 2015: Down

2015 Daily Directional Accuracy: 56/97 (57.73%) 

2015 Weekly Directional Accuracy: 14/23 (60.87%)