WEEKLY MARKET DIGEST: DRAMNATIC CHANGE IN PROBABILITY OF GREECE STAYING WITH EURO, ENTRY ZONE SUSPENSIONS LIFTED $GLD $SLV $USO $DIA $SPY $QQQ $TBF $TBT

WEEKLY MARKET DIGEST: DRAMNATIC CHANGE IN PROBABILITY OF GREECE STAYING WITH EURO, ENTRY ZONE SUSPENSIONS LIFTED $GLD $SLV $USO $DIA $SPY $QQQ $TBF $TBT

(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers. ) 

DRAMNATIC CHANGE IN PROBABILITY OF GREECE STAYING WITH EURO, ENTRY ZONE SUSPENSIONS LIFTED

Per our models, there is a dramatic change in the probability of Greece staying with euro.  We have carefully reviewed the new proposals submitted by Greece to its creditors.   Tsipras has blinked.  The proposal, in substance gives in to creditors’ demands.  The proposal was apparently generated with help from French.  French, the second largest economy in the zone is praising the proposal.  Here is a tweet with English translation from the French President, Hollande:

2015-07-10_07h47_20

 

Hawks in Germany do not still seem to be satisfied.  However Germany will be under tremendous pressure to accommodate Greece.

Many A Slip Between The Cup And The Lip

There is many a slip between the cup and the lips.  According to our models, the probability of Greece staying with euro is now 80%.

China

In Shanghai, stocks continue with a strong rebound.  It is important to note that over half of the stocks are halted and the government has made it very difficult to sell.

Iran

Iran and the U. S. are deadlocked.  The self-imposed deadline for today is likely to be extended.  The outcome of the talks have serious implications for the oil market.  Also gold may react positively because Israel will be pushing for bombing Iran.

Interest Rates

If China market stabilizes and Greece is resolved, the Fed is more likely to raise rates in September.

Yellen is going to speak at 12:30 pm ET today.  Her speech may be a market moving event.

Markets

Interest rates are rising.

Gold, silver and oil are attempting a nascent rally.  However, prospects of higher interest rates may kill the budding rally.

Our very, very short-term early stock market indicator is positive.

Gold futures are at $1160, silver futures are at $15.39, and oil futures are $53.04.

S&P 500 resistance levels are 2100, 2111, and 2132; support levels are 2038, 2017, and 2000.

DJIA futures are up 179 points.

OPTIMISM ABOUNDS, IS IT PREMATURE?

Investors have gotten drunk with optimism again.  What is not to like?

France is helping Greece to come up with a proposal to be submitted to creditors by midnight Brussels time.

In China the government threw everything, including the kitchen sink, at the market but the market kept going down. Now finally China succeeded at stemming the losses by threatening to imprison anyone who short sells, barring those owning more than 5% of a company from selling their stock, allowing companies to stop trading their stocks for no reason, offering loans with very light collateral, ordering state enterprises and their executives to not sell their stocks but instead to buy stocks, and ordering brokers to set up a large fund to buy stocks.

Overnight Shanghai closed up 5%.

Deadline for resolution of Iran talks has been pushed from today into tomorrow.

Gold, silver, oil, bonds, copper, iron ore, and other commodities are joining the party.

Is this optimism premature? All entry zones continue to be suspended as risk to both upside and downside remain very high. 

Our very, very short-term early stock market indicator is positive.

Gold futures are at $1163, silver futures are at $15.37, and oil futures are $53.27.

S&P 500 resistance levels are 2100, 2111, and 2132; support levels are 2038, 2017, and 2000.

DJIA futures are up 183 points.

SHANGHAI PLUNGES AGAIN, SUNDAY DEADLINE FOR GREECE, IRAN TALKS CONTINUE

Overnight Shanghai plunged another 5.9%.  Now the Shanghai has plunged 32% since mid-June.

With the benefit of hindsight, our call that China was in a bubble has proven correct even though at the time of the call we were heavily criticized.  (As a full disclosure we are short China).

Greece has been given this Sunday deadline.  Greece has requested a new three-year bailout and pledged to start overhauls by early next week.

Iran talks continue and may extend past the deadline.  Overall tenor from both sides is positive.  If an agreement is reached, another 1 million barrels of oil will come on the market that is already oversupplied.

The momo crowd is aggressively buying gold and silver. There is no selling by Smart Money.

After plunging yesterday, interest rates are range bound.  Money is flowing into U. S. Treasuries as it is fleeing riskier assets and thus suppressing interest rates.

Our very, very short-term early stock market indicator is negative.

Gold futures are at $1154, silver futures are at $14.90, and oil futures are $52.14.

S&P 500 resistance levels are 2100, 2111, and 2132; support levels are 2038, 2017, and 2000.

DJIA futures are down 138 points.

COPPER FALLS BELOW $2.50 AND IRON ORE BELOW $50, 25% OF CHINESE STOCKS HALTED, A BIG MEETING IN BRUSSELS

Commodities are being crushed.  Copper has broken the major support at $2.50.  Iron ore has broken the major support at $50.  Brent oil has broken the major support at $58.  Gold has broken the major support at $1163.  Silver has broken the major support at $15.50.  Platinum and palladium are falling.

(As a full disclosure we have short positions in copper, gold, platinum, palladium and oil)

25% of stocks worth more than $1 trillion have been halted in China as many stocks exceeded the maximum 10% daily loss limit.

This morning a meeting of the finance ministers is taking place in Brussels with the purpose of addressing a new proposal that Greece was asked to submit.  Greece fired its finance minister and now has a new finance minister. There are unconfirmed rumors that the new finance minister of Greece has shown up at Brussels meeting without a proposal.  A meeting of heads of states is scheduled later today in Brussels.

Our very, very short-term early stock market indicator is not giving any signals this morning because there is too much noise in the data from across the globe.

Gold futures are at $1157, silver futures are at $15.19, and oil futures are $52.46.

S&P 500 resistance levels are 2038, 2017, and 2000; support levels are 2100, 2111, and 2132.

DJIA futures are up 6 points.

TSIPRAS WINS BIG, CHINA BAZOOKA FAILS, TEMPORARILY SUSPENDING ALL ENTRY ZONES

Greek PM Tsipras took a gamble with the referendum and won big.  Greek people have spoken and said ‘NO’ to austerity.

Merkel of Germany is meeting with Hollande of France in Paris.  Their meeting will dictate the next step.

In China, the government threw in everything to prop up the stock market but investors used the ensuing rally to sell.

At this time risks are very high in both directions.  For this reason, all entry zones are temporarily suspended. It is prudent for investors to hold off starting new positions.

Oil continues to fall based on positive sentiment coming from Iran talks.

Gold and silver have given up their initial gains after the Greek news.

Our very, very short-term early stock market indicator is negative.

Gold futures are at $1164, silver futures are at $15.56, and oil futures are $54.55.

S&P 500 resistance levels are 2063, 2100, and 2111; support levels are 2038, 2017, and 2000.

DJIA futures are down 158 points.

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