Good morning. Well, still bearish after all with the Greek situation rumbling on. The daily RSI is down at 22 currently on the FTSE (26 on the Dax) so though not a turning indicator it is showing oversold conditions – so a possible bounce at some some point to get away from that before a further dip is what I am thinking. It all depends on Greece for the moment as another deadline (30th June) looms closer. The short yesterday was the best play, just a shame it climbed back to 6805 to tag the stop on the remainder before dropping further. I had removed my order but the 6730 held well when tested just as we neared 9pm, and has held overnight.
Greece
Greece retreated from budget concessions to its creditors, setting the stage for another attempt by German Chancellor Angela Merkel and French President Francois Hollande to try to break the country’s financing deadlock.
With Greece’s financial safety net expiring on June 30, Prime Minister Alexis Tsipras plans to meet the leaders of the euro area’s two biggest economies in Brussels on Wednesday, his office said in a statement. Any remaining bailout funds are off limits unless Tsipras reaches an accord with creditors.
The three-way talks, scheduled to take place after the first day of a summit of leaders of European Union and Latin American countries, signals the urgency of resolving the struggle to keep Europe’s most-indebted country solvent. Merkel and Hollande stepped up their involvement last month, going over the heads of euro-area finance ministers.
“We want Greece to stay in the euro, but whether this is achievable depends entirely on Greece,” Volker Kauder, caucus leader of Merkel’s bloc in parliament, said in Berlin. “The conditions have to be met.”
Greece’s latest proposal, presented Tuesday, falls short of the budget targets that Tsipras agreed on in a June 3 meeting with European Commission President Jean-Claude Juncker, an EU official said. Greece didn’t dispute those objectives in its subsequent meetings with creditor institutions last week, the official said. [Ref]
US & Asia Overnight from Bloomberg
Asian stocks swung between gains and losses as energy companies advanced and consumer shares slid.
The MSCI Asia Pacific Index was little changed at 146.12 as of 9:16 a.m. in Tokyo after rising as much as 0.1 percent and falling less than 0.1 percent. West Texas Intermediate crude surged 3.4 percent on Tuesday as shale producers curbed output. Yields on 10-year Australian government notes climbed by 10 basis points after U.S. and European debt resumed losses.
“Rising bond yields remains the biggest risk for equities,” Tim Schroeders, a portfolio manager who helps oversee about $1 billion in equities at Pengana Capital Ltd. in Melbourne, said by phone. “There will be further fund flows into China, but whether that’s enough to push the market higher, I’m not sure. Some fund managers probably won’t be able to do anything until such time as MSCI announces its decision.”
MSCI Inc. said mainland Chinese stocks will probably be added to its indexes once market access issues are resolved, deferring a move that could lure billions of dollars to the world’s best-performing market.
Japan’s Topix index slid 0.1 percent. South Korea’s Kospi index added 0.4 percent. New Zealand’s NZX 50 Index slid 0.6 percent, while Australia’s S&P/ASX 200 Index lost 0.1 percent. Markets in China and Hong Kong have yet to open.
China Rally
China’s Shanghai Composite Index fell 0.4 percent on Tuesday after inflation data signaled weaker demand. The gauge rallied 58 percent this year as the government eased policy to revive growth and implemented reforms to rebalance the economy by focusing on consumption instead of investment.
E-mini futures on the Standard & Poor’s 500 Index added 0.1 percent today. The underlying equity rose less than 0.1 percent on Tuesday as banks rallied amid higher bond yields while airlines and technology companies slipped.
Greece retreated from budget concessions to its creditors, setting the stage for another attempt by German Chancellor Angela Merkel and French President Francois Hollande to try to break the country’s financing deadlock. Any remaining bailout funds are off limits unless Greek Prime Minister Alexis Tsipras reaches an accord with creditors. The nation’s financial safety net expires on June 30. [Ref]
FTSE Outlook
If last nights low (and the support area we had at 6730 for yesterday) holds this morning then we could be on for a bit of a rise to the pivot at 6758 and possibly higher. We have the bottom of the 20 day Bianca at 6734 for today and the bottom of the 30min channel also there. There are not a lot of PRT supports below that level but looking at the daily chart we have the 10 day Bianca at 6701, then the Raffs at 6673 and 6633 (20 and 10 day respectively). I think the bulls will try and defend 6730 again today and a long there with a tight stop is worth a go, to target the pivot and then the top of that 30min channel at 6775 area. The momentum is firmly with the bears at the moment, though it could do with getting out of the oversold conditions (the Dax RSI hit 9 yesterday on the 30min which preceded a decent bounce mid morning. Its certainly hard to call as the Greek situation is what one would call very fluid and changes by the hour. Latest is they are borrowing from one to pay the other – vicious circle springs to mind! The market seems to be pricing in a default at the moment and with the Dax now well of its highs it looks likely. If we do get a bit of a bounce going on then a rise towards the top of the 10 day Bianca at 6789 and the 30min just below at 6780 looks viable. 6913 is the 25ema not he daily and an area that the bulls might struggle at – hence a decent area for a swing short.