Economy
Stocks are plunging across the globe as Greece looks set to default on tomorrow’s debt repayment and the reality of a Grexit hits the markets. With emergency aid to the country frozen, Athens has imposed capital controls to halt bank runs and confirmed that the country’s banks would remain shut for six working days. ATM withdrawals are being capped at €60/day. Over the weekend, Greek Prime Minister Alexis Tsipras shocked European policy makers by announcing a July 5 referendum on whether to accept the latest offer from Greece’s creditors.
With a default on the horizon, a divergence in the direction of eurozone bond yields is at work today, with money flowing into Germany’s fixed-income market, and out of Spain, Italy, Portugal and Greece. The turbulence is in contrast to last week, when benchmark German bunds fell and Spanish securities advanced amid optimism a deal would be reached. 10-year bond yields: Germany -18 bps to 0.74%; Spain +24 bps to 2.34%; Italy +24 bps to 2.39%; Portugal +30 bps to 2.99%. The yield on Greek 10-year securities jumped the highest since December 2012, shooting up 379 bps to 14.63%.
Trading
No surprise that the S&P emini (ES) is lower in overnight trade with Greece on brink of default. Trade action is expected to be highly volatile as the GREK situation is highly fluid. Most key price parameters have already been exceeded, so it’s best to trade lighter than usual and be extra nimble, if yo are to trade under these conditions.
Today is Cycle Day 3 (CD3)…Odds of 3D rally > 10 = 82%; Odds of 3D Rally > 20 = 53%; Average Range = 17.75; Max Average Range = 21.50; Possible HOD = 2091; Possible LOD = 2070.75
***Note: The odds highlighted are NOT predictions or trade recommendations, rather a guide based upon historical observed occurrences.
Today’s Hypotheses: July (U) Contract
***The scenario’s outlined below are very loose parameters as the GREK situation is very fluid…Level and tactical trade solutions with be highly in the Trading Room.
Scenario 1: Clear and convert 2075.75 targets 2091.00 (CD1 Low) Above this level measures 2095.00, then 2098.50 – 2101.50 3D CPZ.
Scenario 2: Failure to convert 2075.75 and subsequent violation of 2066.50 targets 2060 handle with deep extreme measuring 2053.75 Dynamic D-Level.
Trade Strategy: Our tactical trade strategy will simply remain unaltered…We’ll be flexible to trade both long and short side from Decision Pivot Levels. Continue to focus on Bull/Bear Stackers and Premium/Discounts. As always, remaining in alignment with dominant intra-day force increases probabilities of producing winning trades.
Stay Focused…Non-Biased…Disciplined ALWAYS USE STOPS!
Good Trading…David
“Knowing is not enough, We must APPLY. Willing is not enough, We must DO.” –Bruce Lee