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Daily Market Update – July 6, 2015 (Close)
Waking up this morning was like a throwback to last week at the same time. Both Monday mornings were preceded by a meltdown of the S&P 500 Futures trading on Sunday, but both seemed to recover as Monday morning’s futures trading got underway prior to heading into the opening bell. Last Monday it ended up actually further deteriorating instead of improving, once the bell rang. This morning the futures, while greatly improved from yesterday evening’s levels, were not really showing any movement higher from their preliminary opening levels, as we all waited to see what the next step of this Greek tragedy will be. Still, with the S&P 500 Futures having been down by as much as 28 points last night, a decline of 16 points with an hour to go until the opening was a rally of sorts. It’s still bad, just not as bad. Somehow, for a brief moment, the market was actually in the green in the late morning. With the announcement of the resignation of the controversial Greek Finance Minister, who threatened to resign in the event of a “Yes” vote and did so anyway even with a resoundinly large “No” vote, there may be some room for compromise between the EU and Greece, both of whom were willing to play their cards. While the Greek Prime Minister is thought to be a polarizing figure, his Finance Minister was even more so and has likely been the architect of the greek strategy in dealing with the EU and plotting out a course that could be followed in a post-EU membership Greece. The very thought that a major impediment to any reasonable resolution to the debt crisis has left the picture could be a very positive event. What happens next is still anyone’s guess, as we are really in uncharted territory. For today, however, it turned out not to be as bad as it looked, although that brief moment in the morning did give way to more selling. No matter how you looked at the weakness, though, it was pretty orderly and muted. While the markets were weaker this morning as we got ready for trading to begin for the week the only real downside for US stocks, once the dust settles, is that the USD may again begin its march to parity with the Euro. The cessation of that march is something that I’ve been expecting to be the good news coming out of this new earnings season, which begins after the market close on Wednesday. However, always as important and sometimes more important than earnings, which represent old news, is the forward guidance. If the USD looks as if it may go back to getting stronger and stronger against the EUro, that forward guidance may have to be tempered. With another large decline looming this morning, there’s always the temptation of looking for bargains. With a little bit of cash in reserve I would ordinarily be reluctant to dip into that reserve, but I started the morning with a belief that the market may have discounted much of the worst that could occur with this crisis, including factoring in an exit from the EU by Greece. That may make it a reason to be buying on this dip, as if it occurs to the level that the Futures are indicating, will be bringing us into “mini-correction” territory. The fact that I also have no option contracts expiring this week, and therefore none that could be potentially assigned or rolled over, may also have played into the decision to loosen up the purse strings just a little. I actually had more trades entered beyond the 2 new positions established, but there’s always tomorrow, as well. Other than Greece, there’s not too much economic news this week to contend with, other than earnings. Those earnings, however, don’t really get going for real until next week and by then you would think that whatever will happen in Greece will have settled down by then. So I will began the morning as an observer, but didn’t take too long to test the waters, as there’s not likely to be the kind of bad news ahead that we haven’t already thought about, unless you want to start thinking about China and its attempts to manipulate their stock market. That may be a story for another time. |
