Transparency, honesty, saying it like it is: that’s how MrTopStep operates. We win some, we lose some, but we get up every day to battle the markets and the robots. No one said this was going to be easy and no one said you are guaranteed to make money. We risk our own money and we know what we are up against. I never get mad when someone ask me about a bad call; they happen. Yes, I keep saying the risk is to the upside and that I still feel we are going up but right now, PLAN D is in effect and the rally is on hold.
I see the same thing you see. An S&P 500 futures that cannot hold above 2100. In most cases, when such an important level is broken so many times, it’s not a good thing. I have always taken a simple approach to a ‘big figure” like S&P 2100—that it acts like a giant pivot. Long above and short below. I am not a market timer and I am glad I am not. I am just a guy, like you, sitting in front of a bunch of screens trying to make sense of what I am seeing, and turn that into a winning trade. When the markets don’t go my favored way, I get out and start looking for another opportunity.
PLAN D
So why are the markets acting so weak? The first part of this is the S&P is into its 6th year of a bull market run. The second part, and one that I do not believe, is that the markets are weighed down by the Fed threat to raise rates later in the year. Number three is the European lenders being upside down with the Greek government. This has been the main rally killer, and we have been seeing it for the last two-plus months. So what is PLAN D? Plan D is what I have been saying the whole time: a Greek default. There is no way the Greeks can come up with the $300 million at the end of the month, and the fact the the government is unwilling to lower Greek pensions, shows they just do not want a deal. It’s all smoke and mirrors and time is now running short.
I cannot attribute all the S&P 2100 failure to Greece, but I can tie many of them to it. As traders we can not complain about existing tailwinds, we just have to make due, but this does have the feel that it could be coming to a head. While the US markets will go for the ride, the DAX is the one that will be hurt the most. This morning the German DAX is down 192 1/2 at 11001, or down 1.8%. The fear with the DAX right now is that if it does not bounce today, there could be a downside washout that could see the DAX drop down to 10,400. And the DAX continues to fall as I write this.
I can’t add much more to this; PLAN D is in effect but the main question here is, does the S&P continue to go for the ride, or does it shake it off and start going back up this week? The June Quadruple Witching week has bullish implications but the Greek debt situation is front and center this morning.
In Asia 10 out of 11 markets closed lower (Shanghai Composite -2%), and in Europe 11 out of 12 markets are trading lower this morning (DAX -1.60%). This week there are a total of 15 economic reports, 9 T-bill or T-bond auctions or announcments, 2 day FOMC meeting, and 2 Federal Reserve bank presidents speaking. Today’s economic calendar starts with the Empire State Mfg Survey, Industrial Production, Housing Market Index, and Treasury International Capital.
Our View: There is not much good to say about the S&P right now. Its “sloshing” around, and it has a funny feel to it. One of the things that worries me again and again is how many times can the S&P futures go down and just go bouncing back up. On the other side of the coin, I still believe zero borrowing cost is where the PPT sits. So even if the S&P does go down, I do not think it will stay down. It is like I have said many times: the same movie being shown over and over again.
“The S&P Futures, and the Greek Wake Up Call”
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- In Asia 10 of 11 markets closed lower : Shanghai Comp. -2.00%, Hang Seng -1.53%, Nikkei -0.09%
- In Europe 11 out of 12 markets are trading lower : DAX 1.80%, FTSE -1.00%, MICEX -0.90% , GD.AT -5.50% at 7:00 am CT
- Fair Value: S&P -9.04 , Nasdaq -9.29, DOW -92.67
- Total Volume: 1.75mil ESU and 10k SPU traded
- Economic calendar: Empire State Mfg Survey, Industrial Production,Housing Market Index, Treasury International Capital..
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