Once again, the market was held hostage by the uncertainty over Greece. To make it even worse, there are no further negotiations scheduled until Saturday, which means the action tomorrow may be even worse, especially since it's a summer Friday.
Like yesterday, the market suffered some minor losses and had a generally negative tone, but it wasn't bad enough to do any technical damage. The S&P 500 is still well above the June lows and there isn't any sign of great anxiety. It is simply slow and lackluster, which triggers a few stops and pushes some short-termers to the sidelines.
Today was one of those days where your view of the market is likely a function of the stocks you are holding. If you picked a few that were acting well, there is no reason to be very negative, but if you were caught in a few bad plays, you many not feel so sanguine.
The best thing that the market has going for it right now is that we have end-of-the-quarter action coming up, which tends to have a positive bias, and we also have the potential for some positive headlines about Greece.
Trading in 2015 has been characterized by periods of extremely dull and slow trading. The conventional view is that such action is a setup for some major drama down the road. It isn't hard to imagine a big move at some point this summer, but until we move past Greece, there isn't any reason to worry too much about it.
Have a good evening. I'll see you tomorrow.
June 25, 2015 | 1:12 PM EDT
Market Wanders Through Greek Wilderness
- As if summer trading wasn't already slow.
The market continues to meander with a negative bias as we await something new about Greece. At the moment, it looks like negotiations are on hold until Saturday, but the politicians continue to express optimism that a deal will be done.
Meanwhile, we are seeing some very slow summer trading. The indices are close to flat and the action is very random. Unfortunately, I'm on the wrong side of that randomness in a number of stocks today and am not finding many opportunities to make up for it so far.
I'd like to offer some profound insights into the market like Carl Icahn and his comments about how the market is "extremely overheated." While stuff like that makes for good headlines and gives journalists something to talk about, it is totally useless from a trading standpoint. Many very astute folks have been telling us for years that this market is heading for disaster. Maybe we are, but if your timing is off, it is as good as being wrong.
There is no way to know with any degree of certainty when the obvious negatives are going to matter. Pundits like to talk about them because there will always be a time when the market will go through a down cycle again and they will be prepared to say, "I told you so." Predictions can be interesting, but they don't make for good trading.
At the moment, the market is still just fine. The action may not be very interesting or lively, but there is nothing at all to indicate Icahn's predictions are going to come true. I guarantee you he will eventually be right, but until there is some negative price action, it is a waste of time to worry about it.
June 25, 2015 | 10:36 AM EDT
Market Still Dances to Greece's Tune
- As long as Greece remains unresolved, the trading action is going to be random.
In the early going the market is dancing to various headlines about the Greece negotiations. One minute there is a deadlock and the next there is great optimism that a deal will be made. As I discussed this morning I'm quite confident a deal will eventually be reached but we have to go through the misery of this random movement in the short term.
The net impact of Greece this morning is dreary and lifeless action. We have minor changes in the indices and breadth is running slightly negative. Notably, there are almost no pockets of strong momentum. Traders have been finding good opportunities, which has helped sentiment, but that has dried up yesterday and today.
One group attracting action is health care. HCA Holdings (HCA) and UnitedHealth (UNH) are higher on news that the Supreme Court has upheld Obamacare. That is giving the overall market support as well.
As long as Greece remains unresolved, the trading action is going to be random. But I'm far more leery of being too bearish rather than too bullish. This market is eager to celebrate the end of so much focus on Greece, and the politicians are desperate for that to happen as well.
It is tough market but there is drama brewing that should provide entertainment soon.
June 25, 2015 | 7:14 AM EDT
Market Has No Choice but to Deal With Greece
- If you're on the wrong side of the news, it is going to cost you money.
"Failure is delay, not defeat. It is a temporary detour, not a dead end."
-- Denis Waitley
The Greek crisis grinds on and stock markets sit and wait. There is a positive reaction to headlines several hours before the market open, but the premarket action has been bouncing around randomly as this crisis plays out.
While Greece is irrelevant to the value of the vast majority of U.S. stocks, we still have to deal with it as it is the primary focus of short-term direction. If you are on the wrong side of that news, it is going to cost you money in the short term and that is very important to many money managers, as we are fast approaching the end of the second quarter of 2015.
The market exhibited some nervousness yesterday over a Greek solution but that was partially a product of being technically extended after the Nasdaq had run up 2.6% over the last six trading sessions. The market has been anticipating a Greek deal and when it stalled out a bit it was an opportunity to take profits.
While it was a poor day yesterday, it wasn't bad enough to really shift market character. We still have an uptrend in place and a positive bias. Conditions are set to gap back up and recoup a big slug of those losses, which is exactly what you'd expect to see when we have trading range action and a good dose of uncertainty.
The temptation for many market players is to try to make the big call as to how exactly this situation is going to play out. I believe it is likely that a deal is struck and we see an upward spike on the news. I don't know when that may happen and there is the risk of a high level of volatility in the interim.
Your best guide as to how this will play out is the price action of the market. Up until yesterday the price action has indicated little worry or concern over Greece despite the sensationalist headlines in the business media. The market has been very complacent but some doubts crept in yesterday, which may actually be a good thing as far as a potential breakout if some deal is struck.
This negotiation is very similar to what we saw when U.S. politicians were negotiating an increase in the debt ceiling a year or so ago. We had to go to the brink a number of times and there was great concern that a default would occur. But virtually everyone wanted a deal to be made and ultimately it was done. We just had to go through the process and there had to be some real fear that maybe it would all far apart. Greece is much the same and that is why a deal is very likely to be made soon.
Everyone is tired of this issue but it is the driving force and we have no choice but to deal with it. It helps to stick with stock picking but that can be dangerous when we have a day like yesterday, where the broader market action pulls down most everything. Even good stock selection can't overcome the tide of the market at times.
We are looking to gap up this morning as an EU official is on the wires saying that Greece documents can be the basis for a deal. We've heard that before and it never goes smoothly, but the chances of a deal are much higher than the chances that one is not made.
Ultimately, the quarter is ending, window dressing is picking up and market players are eager to put points on the board before the Fourth of July holiday. There should be pockets of trading action, although we will have to keep an eye on the newswires for the next chapter in the Greece saga.