Greeks Make A Deal

As you have heard by now, the Greeks have won another bailout to avoid default, but reaction to the news has been modest. While European markets have seen a slight sell the news type reaction, futures here are showing small gains as we gear up to begin this 4-day trading week. Here are the headlines:

  • Europe reaches a Greek deal (BL)
  • Analyst reaction to Greek deal (WSJ)
  • Feared bond swap met with shrug (WSJ)
  • ECB bond buying halted (FT)
  • Top banks in EU rush for safety (WSJ)
  • China cuts reserve requirement ratio (CNBC)
  • Japan’s trade deficit widens (BL)
  • OECD sees growth halt (CNBC)
  • Fed writes sweeping rules in private (WSJ)
  • Oil climbs amid Iran tension (REU)
  • Concerns over rising gas prices surface (CS)
  • Walmart reports earnings (REU)
  • Home Depot quarterly results beat estimates (REU)
  • Kraft profit meets Wall Street view (REU)
  • Medco quarterly profit jumps (REU)
  • Pfizer aims for China expansion (CNBC)
  • URS to acquire Flint Energy (BW)
  • FedEx seen as possible TNT Express suitor (BL)

Last week was a week of continued progress by the bull camp. Last Thursday we broke above the tight consolidation zone and on options expiration Friday we confirmed the upside breakout by continuing to trade higher above the range.

In doing so we came within three points of completing the bullish cup/handle setup we’ve been monitoring for many weeks and remain just below the 2011 intraday high. We also closed at the middle of the uptrend channel. In sum, the negative seasonal, historic, and sentiment factors that were in play last week offered no obstacle to the bull camp.

S&P 500: Daily View

While the price action studies (both sentiment and historic) continue to suggest limited upside (as they did also last week) and especially for today’s session, the market’s focus will be upon the reaction to the Greek deal.

Already there is plenty of skepticism and doubt that the deal will hold, but that’s nothing new as we’ve seen many times over the past year. What matters most will be whether we see any continued progress upon last week’s range break or complete reversal of fortune. This is particularly true since the market provided a short-term top on February options expiry last year and there are many people who are looking for any confirmation that the market will struggle now and offer any hint that we’re on the same track again this year. While these tight historical comparisons rarely offer much of a profitable edge, I know many are looking for any sign of confirmation in this manner.

Bottom line – let’s see how the market reacts to the deal past the first few hours this morning and particularly whether last week’s range breakout continues. If we do move back into the prior range, it will be important that the range lows at S&P 1335.92 hold as support.

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About abwehra group

The Art&Science of Trading Gold
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