Support 6922, 6913, 6898, 6893, 6867 Resistance 6070, 6975, 6990, 7029, 7084

Good morning. Well that long was short lived that took via an order at 6932, as the market was a bit over reactionary to news and rumours. Still no Greek deal but it is apparently getting closer. Greece’s prime minister said his government submitted a new plan aimed at ending a stalemate, just as creditors met to finalize theirs. European leaders and the head of the International Monetary Fund gathered last night in Berlin to work out ways to avert a Greek default. The country owes four payments to the IMF this month, and its aid package backed by the euro region expires at the end of June. “Clearly there’s still a lot of negotiations to go,” said Ben Kumar, who helps oversee about $12 billion at Seven Investment Management in London. “Central-bank action is already factored in, as are corporate earnings. That leaves Greece as the one thing to look at right now. We see headlines everyday saying this is getting serious. Eventually, people get bored. They’ve been hearing it for months.”

US & Asia Overnight from Bloomberg
Asian stocks fell for a second day, led by declines in financial and consumer companies, with Japanese shares snapping a 12-day winning streak. Chinese equities climbed as an index of smaller firms closed at a record.

Hyundai Motor Co. slumped 10 percent to the lowest level in almost five years in Seoul after the carmaker’s domestic sales declined for a second month. Commonwealth Bank of Australia, the country’s largest bank, fell 1.8 percent as a gauge of Asian financial shares led the regional retreat. NTT Docomo Inc. surged 3.9 percent in Tokyo after the Nikkei newspaper reported the mobile carrier will boost shareholder returns with equity buybacks and cost cuts.

The MSCI Asia Pacific Index fell 0.7 percent to 150.17 as of 4:15 p.m. in Hong Kong, on course for the lowest close since April 7. Japan’s Topix index fell 0.3 percent to halt its longest winning streak since August 2009, after a 5.5 percent surge over the prior 12 days. The Shanghai Composite Index’s 1.7 percent gain brought its rally this year to 52 percent.

“We’re getting increased volatility now because the market has risen to such high levels,” said Khiem Do, the Hong Kong-based head of multi-asset strategy at Baring Asset Management Ltd. “China’s central bank will have to ease further because the economy is still quite sluggish. This will continue to provide liquidity to fuel the market rally. Should there be a Greek default, there’s likely to be a negative market reaction.”

Leaders in Europe and the International Monetary Fund agreed to step up the intensity of talks over Greece. Efforts to end the impasse have become urgent as the Mediterranean nation faces a debt repayment to the IMF on Friday.

Chinese Stocks
The Shanghai Composite erased losses of as much as 0.7 percent today after posting its largest gain since January on Monday. The ChiNext index of smaller Chinese firms advanced 4.9 percent, closing at a record for a second day.

Hong Kong’s Hang Seng Index slid 0.5 percent and the Hang Seng China Enterprises Index of mainland firms listed in the city lost 0.7 percent. Both gauges have climbed more than 16 percent this year, compared with an gain of 8.9 percent on the MSCI Asia Pacific Index.

India’s S&P BSE Sensex Index declined 1.6 percent on concern the nation’s third interest-rate cut this year won’t be enough to spur economic growth. Reserve Bank of India Governor Raghuram Rajan lowered the repurchase rate by 25 basis points to 7.25 percent and said he will wait to assess monsoon rains before acting again.

Lenders were the biggest drag on Australia’s S&P/ASX 200 Index, which fell 1.7 percent. The Reserve Bank of Australia kept its record-low 2 percent benchmark rate unchanged Tuesday, as forecast by swaps traders and economists. New Zealand’s NZX 50 Index gained 0.3 percent.

Seoul, Singapore
South Korea’s Kospi index slid 1.1 percent and Singapore’s Straits Times Index lost 1.3 percent.

E-mini futures on the Standard & Poor’s 500 Index slid 0.2 percent. The underlying measure rose 0.2 percent on Monday after U.S. output expanded more than forecast in May as orders rose at the fastest pace in five months, while construction spending beat estimates. The reports are the latest in a slew of data due this week that the Federal Reserve will weigh to determine when to raise interest rates. [Ref]

FTSE Outlook

Will they won’t they? I still imagine that a deal will get done and as the final countdown gathers pace it will be the usual 11th hour agreement. I expect we may dip a bit further on the uncertainty (S&P to 2085 maybe?) so a slightly bearish bias for the moment, though we are not far off the bottom of the 20day Bianca channel at 6913 for initial support, and with the pivot at 6922 this area might hold for an early morning climb. There is also the 10 day channel bottom at 6898, so a break of these will likely lead to that dip lower. We tested the bottom of the Raffs yesterday and a bit lower before the bulls managed to pull things back up to 6950 in what was a pretty choppy and hard to call day in the end. Certainly no harm in taking more of a backseat while this Greek situation plays out. Support from the Raffs is at 6868 and 6858, while the 200ema on the daily is slightly lower at 6843. Might be a good area to chance a long if it got that low. Resistance wise, we have 6940 as the first level looking at the 30min channel, followed by 6970, where I think it worth a short. Above this then the top of the Bianca channels are 7029, 7084 – positive news will probably lead up back there, however technically speaking, the bulls need to break 6989 before that as we have the 25ema on the daily there with a bearish setup.

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