The market had been doing an excellent job of ignoring the mess in Greece, but it lost its vigor after news this morning that the negotiations had faltered once again. There are still high expectations that something would be worked out, but there is a little more doubt and a lot of fatigue as this thing drags out.
Many market players don't believe Greece is very important, but they recognize it's an easy excuse to justify whatever happens next. We are sure to have a celebratory spike if a deal is done, and there is going to be some wild volatility if Greece actually does fail to pay its bills.
While it was not a very attractive day, with some good-sized point losses in the indices and 2-to-1 negative breadth, it wasn't a significant technical breakdown. The bears have an opportunity to press their advantage, but they seem to have forgotten how to do that. Upside momentum has been difficult lately, but downside momentum hasn't even existed.
Let's hope we'll have something definitive on Greece soon. Most traders are tired of being held hostage by a third-tier country and just want to move on. The powers that be in Europe obviously want a deal, and very likely one will be made, but like most political matters we have to go to the brink before any hard decisions are actually made. Given the way this market operates, the news will hit overnight and we'll have a big gap up with all the gains coming before the open. That will work just fine for the longer-term investors, but will drive traders crazy again.
This market is still in pretty good shape, but we are being held hostage by European news and that is causing some anxiety.
Have a good evening. I'll see you tomorrow.
June 24, 2015 | 1:24 PM EDT
Market Grows Restless While Waiting on Greece
- Lots of stocks jerked around on thin trading.
Market players are growing a bit antsy as they wait for news about Greece. There was little worry at the open, but now traders are growing restless and a few niggling doubts are starting to blossom. The consensus is that a deal will be done, but this is like waiting for the Fed interest rate decision, and a number of stocks are being jerked around in the thin trading.
Overall there is nothing technically significant about the weakness today. The S&P 500 has been up five of the last six days and is still holding above the 50-day simple moving average. The Nasdaq and iShares Russell 2000 ETF (IWM) are in even better shape.
The bears tend to be overanxious about reading something significant into some minor weakness. We really can't blame them, since they have had so little success for so long. Many of them still dream of nailing the exact moment that this market makes a significant top. They have lost a lot of money in that pursuit, but they will keep on trying and will be celebrating their great predictions when the turn finally does occur.
At this point, there isn't much to do but wait for the next piece of news about Greece. There are some pullbacks of interest for the bottom-fishers, but it is just a slow drip lower today, which precludes dramatic moves.
Odds are very high that another "Greece is saved" headline will appear in the next couple of days. Be careful about being too negative until there is greater clarity there.
June 24, 2015 | 10:23 AM EDT
Gearing Up for End-of-Quarter Games
- Traders are aggressively pursuing limited pockets of momentum.
Market players shrugged off premarket pressure caused by Greece, but lacking upside catalysts they are taking some profits in the early going. Breadth is running about two to three negative and there isn't much follow-though in the momentum names other than Facebook (FB) and Netflix (NFLX). There certainly is no panic over the Greece situation but there isn't any rush to jump in front of the next headline either.
While there is endless talk about Greece, the real focus of the action is individual stocks. We are gearing up for the end-of-the-quarter games and traders are quite aggressive in going after the limited pockets of momentum. There continues to be enough good trading action to keep the mood positive.
Rather than try to guess what happens next with Greece I'm focusing on some trades. I started some bluebird bio (BLUE) on a spot secondary this morning that was priced at $170. I continue to add to my position in eHi Car Services (EHIC), the Chinese Uber play, which is my Stock of the Week, and I'm looking for Energous (WATT) to make another run after a spike yesterday.
There isn't a whole lot on the radar but overall the action continues to have a positive bias, which will help more opportunities develop.
Jun. 24, 2015 | 7:17 AM EDT
Don't Focus Too Much on Greece
- This is still a stock pickers' market.
"The first principle of contract negotiations is don't remind them of what you did in the past -- tell them what you're going to do in the future."
Early indications have turned negative, as Greek Prime Minister Alexis Tsipras indicates that creditors are unwilling to accept his proposals. Given Greece's track record, that isn't that surprising, but the market has been optimistic that a deal was imminent and even now the reaction to the news is fairly mild. The S&P500 is indicated to open a few points lower and is hovering at yesterday's intraday lows.
Market players have watching the Greek crisis being pushed back from the brink so often for so long, that they really don't seem to believe it is possible for a deal to not eventually be made. There are more meetings about to take place, and you can bet that there will be some optimistic headlines again soon.
Typically, uncertainty of this sort is a market negative, but in this situation it has been a positive, because so many market players are anticipating a positive resolution. They want to be holding stocks when the next spike occurs. There haven't been any real doubts that Greece would work this out and stay in the European Union. If a default actually does occur, it is going to roil the market as so many simply are not prepared for that possibility.
The indices have been slowly moving higher the last couple days, as market players wait for news from Greece. It has been rather slow and narrow, but yesterday we saw some leadership from key stocks like Amazon.com (AMZN), Action Alerts Plus charity portfolio holding Facebook (FB) and Netflix (NFLX). The number of stocks breaking to new 12-month highs has been building, and there is some relative strength in small caps.
Overall, the price action has been good. It isn't euphoric, and there isn't any wild celebration, but clearly the bulls have the edge and have even been gaining a little better momentum. The biggest positive is that some key stocks are leading. That is likely a function of window-dressing as the second quarter comes to an end, but it helps sentiment and builds stronger underlying support.
Unfortunately short-term direction is going to be mainly a function of Greece. If negotiations really do fail and a deal is not made, it is going to be very surprising and this market is going to see some wild swings. If a deal is made, we'll see an upward spike, but it is already anticipated to a great extent and it will likely produce some "sell the news" pressure.
The bulls are convinced that this market can really run up when the uncertainty of Greece is removed, but we have already been anticipating that for a while.
The main thing to keep in mind as you consider this market is the degree of underlying support. Nothing has been able to put a real dent in the price action. We have some technical distribution and it has been narrow and slow, but the dip buyers are tenacious and there are folks lined up to take advantage of any pullback. In fact, if the market were to see a dip on a Greek default, I would expect a quick bounce as all the dip buyers rush in. Buying pullbacks has been one of the best bets you can make, and there are a lot of folks out there anxious to give it another try.
For now, we have some minor weakness on the Greek headlines and we'll jump around as more news emerges. The good news is that it is still a "stock pickers' market" and that means we can focus on individual stocks. There are opportunities but it is important to stay selective. With the end of the quarter approaching fast, there is a positive bias kicking in as well, so don't focus too much on Greece. The way to make money right now is to focus on the micro, rather than the macro.