The Morning Call
7/6/15
The
Market
Technical
The
good news is that the S&P bounced nicely off the lower boundary of its
short term uptrend. The question is, can
it respond to the challenge of its 100 day moving average as it has every time
for the last two years, including the 12 trading day trampoline bounce in
October 2014.
Three
peaks and a domed house (short):
Update
on sentiment (short):
The
long Treasury continues to drift lower, remaining below its 100 day moving average
and the upper boundaries of its very short term and short term downtrends. As
long as bond prices are declining in the face of ho hum economic stats and international
economic turmoil, it is not a plus sign for stocks.
On
the other hand, the dollar (and gold) is on snooze patrol which under the same
economic scenario is a positive for equities.
The
VIX hasn’t been at current levels since early February. Still it is in a trading range that there is
no reason to assume will be challenged.
Fundamental
As
I am sure that you know by now, the Greeks overwhelming voted against accepting
the Troika’s bail out terms. Everybody
is in meetings right now trying to figure out the next move. Whatever happens, it looks like the ECB/Greece
will be testing a couple of theories: (1) are there unintended consequences? And
if so, how significant will they be?, (2) now that its bluff has been called,
will the Troika blink?, (3) if not, will Greece turn to Russia and what would
that mean for NATO?, (4) even though the Greek economy represents a small
percentage of the total EU economy, will there be sufficient concern within
other countries to disrupt what appears to be a nascent EU economic recovery?
I
am sure that there are more, but those are the first that come to mind. In the meantime, here is a list of available
ECB policy tools to help stem any financial turmoil within the EU:
Meanwhile,
don’t take your eye off of China (medium):
More
on valuation (medium):
Economics
This Week’s Data
Other
Update
on big four economic indicators (medium):
Politics
Domestic
International War Against Radical
Islam
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