#MarketUpdate: It’s all Greek to me…The markets opened in the…
#MarketUpdate: It’s all Greek to me…
The markets opened in the red as expected, rallied to near unchanged and at midday are just modestly lower. The Dow is off 44 points, Nasdaq Comp in the red by 14 pts, S&P-500 lower by 6pts, and the Russell 2000 is holding up the best with only a 3 point loss. For some context, the VIX measure of volatility (sometimes referred to as the fear gauge) is at 17.5, more than a full point below that of last Monday. Greece is the big story of the day as voters rejected more austerity measures despite the general consensus that voters were leaning toward approving the ballot initiative. Stay tuned….
The ISM Non-manufacturing index rose to 56.0 in June from 55.7 in May, which was the weakest reading since April 2014. The related New Orders Index increased to 58.3 in June from 57.9 in May, indicating production growth continues moving in a positive direction.
Commodity prices are generally lower across the board with oil retreating falling over 2% to $58.95/bbl, dropping below the $60 level for the first time since mid-April. WTI slid 4.1% to $54.65 hit is lowest since April 15.
· NatGas futures for Aug. delivery drop as much as 2.7% from July 2 close to $2.746/mmBtu in electronic session on Nymex.
· Agricultural products also in the red with both corn and wheat falling 1.6% while soybeans retreated 1.4%.
· Copper slid as much as 4.2% and hit its lowest price since Feb. 3rd, Nickel fell about 4%, and lead & aluminum are nearing bear markets territory.
· Gold is slightly positive after opening lower by ~ 0.3 percent; platinum and palladium both dropped more than 1%.
M&A is still very active with over $2.8 trillion of announced or proposed deals YTD globally. Today’s focus is in the managed care space with Aetna to acquire Humana for approximately $230 per share in cash and stock.
Technical Take
Stocks today are trading somewhat muted in terms of their response to the Greek NO vote as the Sun has managed to rise once again in the East. Markets have been working their way higher all session long as a result of removal of some level of uncertainty and are possibly experiencing some temporary relief. However, this is not the end of the game, just another unfortunate inning, so we’d remain prepared to experience more choppiness until an outcome becomes clearer. In other news, there is a tone of growing concern about China and the commodity markets are feeling the pain in response with oil down -5% on the day, having broken down (once again). The badly beaten and oversold airlines are catching a bid as a result along separately with biotech, healthcare and small caps showing strength.
· To close the short week the S&P 500 Index (SPX) settled below its 100 day moving average for the first time since January, reflective of the unique brand of uncertainty as we headed into the long weekend. However, today we’ve so far managed to hold above the 200 dma at 2055 despite getting as low as 2058 early in the session. We’re now rebounding though would remind investors that significant technical damage still needs to be repaired in order for something longer lasting to develop. First resistance resides at 2080 then 2096 (100 dma). Ultimately, it’s probably still best to exercise caution for now.
The Nasdaq Composite Index (CCMP) for its part held above its 100 dma to close last week and after dipping below it early this session, is attempting to retake 4997. A close above this level today remains in question and a move beneath would be indicative of further weakness and deterioration of the primary trend. Further support in the May lows at 4900 should be noted on the week should things get dicey. Nearby minor resistance at 5050.
Though the technical damage is not as severe for the Nasdaq, there is likely a certain amount of comfort and confidence that needs to be re-established before we can advance on firm footing again.
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#MarketUpdate: It’s all Greek to me…The markets opened in the…
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