It was a day for the equity bulls, with the sp'500 +20pts @ 2121. However, the Greek situation is clearly at breaking point, and all things considered, a default looks probable in the near term. From a pure trading perspective, the more important is will a default cause some serious market upset?
sp'weekly2
Greece, monthly
Summary
*weekly 'rainbow' candle has indeed turned to an outright bullish green, but if the market sells lower into the weekend, we'll likely settle an uncertain blue.
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As for the Greeks, to me it is increasingly clear. They are getting more moody by the day, and with talk of 'IMF/Troika criminal lenders', I can't imagine the Greeks not defaulting... unless they are simply wired billions of new 'unconditional' free money.
The real issue is whether a default will quickly lead to an exit from the Euro. From what I read, the Greek people themselves aren't actually wanting to exit the Euro.
In this situations though, things can develop fast - as we saw with Cyprus, and I think all traders should be mindful of a default/GREXIT across any given Fri/Sunday period.
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As for Greek equities, there is a break of lower rising support, a move to the summer 2012 low (471) looks probable with a default.
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Update on China
Day to day volatility continues, and there is a significant probability that the mid term upward trend from the 3400s is about to be decisively broken.
China, daily, 1yr
Best case downside this summer/early autumn remains the 3400s... having ramped from 2K in May'2014. Renewed upside to new historic highs (>6124), looks due next year. By 2017, the giant 10K threshold will be within range.. before the QE/paper bubble blows up.
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Looking ahead
Friday is quad-opex..along with some index rebalancing, expect some serious chop into the weekly close.
*Fed officials Williams and Mester are on the loose, one of whom might give the algo-bots an excuse to kick the market.
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Cautiously short the market... via INTC
Having watched Intel (INTC) fall from May 29th' - $34.75, to a June 15'th low of $30.94, I was looking for a bear flag to develop, and that is what I now see. Today's rally to $32.50 was effectively at the top of the flag... near the 50dma.. and for me, that merited taking a short position.
I've Oct' option puts, so I'm not at all concerned about the ticking detonator clock. Between now and then... I have to believe INTC will at least hit $29.. if not the bigger H/S downside target of 26/25.
Goodnight from London
