Greeks say No | Prediction |Support 6449, 6425, 6413, 6366, 6300 Resistance 6474, 6509, 6580, 6601, 6612, 6644, 6687

Good morning. I hope you had a good weekend. There is only one story today and its “no”. Greece voted against yielding to further austerity demanded by creditors, leaving Europe’s leaders to determine if the renegade nation can remain in the euro. Sixty-one percent of voters backed Prime Minister Alexis Tsipras’s rejection of further spending cuts and tax increases in an unprecedented referendum that’s also taken the country to the brink of financial collapse. Tsipras described the result as a “great victory”, and said Athens would return to the negotiating table on Monday with a strengthened hand. The result turns the tables on Merkel and Greece’s other creditors, who must now decide if a financial rescue of the region’s most-indebted country is still possible. It significantly raises the chances of a Greek exit from the single currency, as the country’s banks run out of cash and its economy staggers toward all-out collapse.

US & Asia Overnight from Bloomberg
Asian stocks fell, with the regional benchmark index set for its biggest drop in more than a year, after Greece voted to reject further austerity. Chinese shares rallied after a three-week slump.

Asahi Glass Co., which gets about 21 percent of sales from Europe, dropped 2.7 percent in Tokyo. BHP Billiton Ltd., the world’s biggest mining company, slipped 2.1 percent in Sydney as copper futures headed for a second day of declines in London. China Airlines Ltd. gained 2.9 percent in Taipei after regulators increased flights to mainland China.

The MSCI Asia Pacific Index slid 2.1 percent to 143.35 as of 12:16 p.m. in Hong Kong, heading for the biggest decline since February 2014. Sixty-one percent of voters backed Prime Minister Alexis Tsipras’s rejection of further spending cuts and tax increases in an unprecedented referendum that’s also taken the country to the brink of financial collapse. The results mean Greece exiting the currency union is now the base scenario, JPMorgan Chase & Co. said. Japan’s Topix index sank 2 percent as the yen gained 1 percent against the euro.

European Union President Donald Tusk called a euro-area summit for Tuesday. While the European Central Bank’s Governing Council is due to talk on Monday on whether to keep supporting Greece’s lenders, it’ll probably be reluctant to preempt such a meeting.

“There’s a whole range of unpredictable outcomes,” Mark Lister, head of private wealth research at Craigs Investment Partners Ltd. in Wellington, which manages about $7.2 billion, said by phone. “It’s surprising that the ‘no’ vote won so convincingly, certainly more decisively than the polls had suggested. This puts us in limbo for so much longer, and it’s very negative for risk sentiment especially when you add in what we’re seeing with developments out of China.”

China Measures
The Shanghai Composite Index gained 2.2 percent after China suspended initial public offerings and brokerages pledged to buy shares in weekend measures aimed at halting the market rout. Mainland shares have erased $3.2 trillion of value after posting their biggest three-week slump since 1992 on concern leveraged traders are liquidating bets after valuations exceeded levels seen during China’s stock-market bubble of 2007.

Australia’s S&P/ASX 200 Index dropped 1.3 percent. South Korea’s Kospi index sank 1.8 percent. Taiwan’s Taiex slid 0.8 percent and New Zealand’s NZX 50 Index slipped 1 percent. Singapore’s Straits Times Index fell 0.8 percent, while Hong Kong’s Hang Seng Index tumbled 3.2 percent.

West Texas Intermediate crude dropped as much as 4.4 percent to as low as $54.44 a barrel, headed for its lowest close in almost three months. [Ref]

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

Well yet again we open Monday morning significantly gapped down from Fridays close, a top left at 6593 this time. We didn’t close the previous gap last week though at 6757. We are not far off the bottom of the Bianca 10 day channel for support at 6413 though today and a level that could well be worth a very brave long! The US is back today after having Friday off so will be interesting to see how much notice they take of the Greece news. They don’t usually like to miss too much of a fall so we could get a bounce this afternoon, pulled up by them. With such a large gap down most technical levels become pretty irrelevant, but the daily pivot is at 6601 for resistance if it were to add 150 points today. Doubtful though! While writing this the Greek Finance minister has just resigned. Probably forced out so that a deal can be done and talks advanced.

In light of that I think it helps the bulls actually, and the market has just risen 15 as that news broke. Its going to be a fast moving day i think as stories break. Generally, though we have a bit more clarity now having had the referendum, so just sort out the money side now or leave the Euro. The 10min chart is the one I have used for the arrows today as there is a fairly decent channel in play initially, with the bottom coinciding with a fib pivot at 6449. All moving averages across the board are bearish though to start so maybe a bit of a dead cat bounce similar to last Monday.

57 Comments

  1. I would assume a deal of some description will be reached very quickly now the Greeks have changed finance minister. That with all the central banks working in unison to contain fallout. Can see Dax 11200 CAC 4900 FTSE 6650 DOW 17800 by end of week.

    1. Talking your book much, Argyle?
      I think the FM resignation is just politics, but agree with you re Central Bank intervention, which also looks the case in China.
      Whatever happened to free markets? It’s like playing poker with someone at the table with unlimited credit.

  2. This macro stuff is totally unpredictable so I’m trading this morning as usual on my RSI basis, 80/20 on the 1 min.
    Shorted that rise av 54 and got one eye on the developing downtrend which is currently being tested at 6530. Stop at break of 60 rsi on 1 min 10 period.

  3. tmfp. This isn’t about Greece its about Italy and Spain. If they go down the same route Euro and EU in tatters. No one wants that at the moment and that includes US China UK and the rest. The central banks will intervene to whatever level to isolate the Greek situation. One way is to push indice prices up so everything seems normal. In a free market your predictions would be correct, however as you say they have unlimited funds and they will use them now and not worry about the long term consequences.

  5. Short term uptrend broken, momentum lost, possible lower high developed, short at 51 12 either way

  6. It’s like Déjà vu. I’ve seen it all last Monday when I was shorting too early. Didn’t make this mistake today. Shorts are on my mind later this afternoon.

  7. when do we expect this dead cat bounce to reverse a bit. Re central banks, aren’t they supposed to be open and honest…can we not see what they are actually doing in the markets?

  8. So, through 60 with no fuss or pullback so far. Suppose 80 is next stop.
    DAX a few points or so from Friday levels after the worst possible outcome of the referendum.
    *shakes head and shrugs*

    2. Disagree its the worst outcome. Now there is a clear understanding from all sides on the compromise required. This will lead to a quick conclusion either way. Markets don’t like unsettlement. This way supported by central banks the markets will stabilise.

    3. Lol @ Jack, well it’s a start mate.
      I would have thought the potential ramifications of Greece and China as well as general macro economics would be worth a 10% correction ~ 700 points.
      A healthy 6 year bull market should be able to cope with that without artificial support from magic money.

      @ Argyle “This will lead to a quick conclusion either way”. Wouldn’t be too sure, the Bundestag has to approve any further German negotiations and they’ve just all gone on holiday.
      Big hitters such as JPM now have a Grexit as their “base case”.
      No fat ladies heard so far…

  10. Okay, so slightly different than last Monday but looks still on track to form a top at these levels. Can’t go any further up unless there is a retest of yesterdays lows

  15. Low to High last Monday 6512 to 6693 = 181 points
    Low to High today 6414 + 181 points = 6595.

    No idea if this sort of symmetry will work but it’s curious that 6595 is where the market closed at 21.00 hrs on Friday. Might be worth a short from here (if it gets there). It’s already closed the day gap (low last Friday was 6572) which is where it’s finding resistance.

    1. If you’d have been watching for 80+ on the 1 min rsi like wot I said, you’d have caught the top like me 🙂
      Only took 10 though, looked to reshort the bounce and missed it by a couple as well 🙁
      Which way is the next 30 points from here (52) then Nick?

          2. could take a while to fill, but I’m looking for another move up hopefully with the US open.

      2. I didn’t think I did too badly considering I picked that level when it was 6455 at 06:30 this morning!! 🙂

    1. While 40/45 holds it looks quite comfortable.
      I’d think the US will be quite encouraged that Europe was dealing with its own problem by the strength here this morning, and will probably open strong.
      As the day wears on a sell off becomes more likely, I’d guess.

        1. Do 13 points constitute a bounce?
          Looks potentially weak, and the US was only lukewarm at best.

          2. So 17 must be an overbought rally then 🙂 Short @50 6 point stop living dangerously

  20. They will save some of their powder for the next few days. Expect it to drift for rest of dat.

  21. Various Euro people yes no, markets go up down, panic

    60% of Greek voters say no, how dare the markets drop. Lets just ignore them

  22. Too bad today. Got stopped out in the dax long and no trade found after Dow open. There will another day!

  24. As far as Greece is concerned. Looks to me we have had all the bad news. probably a controlled exit from the Euro over the medium term. Greece will soon disappear into the background in the same way Ukraine has. QE will continue in Euroland, interest rates will remain low. Stock markets will rise for another year. FTSE 7000 DAX 12500 CAC 5300 DOW 18300 during August

  25. Jack 2 I have been trading on and off for a couple of years now. Yes you are right I am still learning 🙂
    Change in trend is something I struggle with. When I did my analysis over the weekend, I decided I had to go long on a gap down, but I didn’t I was foolish to be looking for shorts today…

  26. Clawed back all of the loss today. Now short Dow dax and spx. Lets see what happens

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