Markets waiting for news on Greece and Crude and Gold try and lock in weekly gains

—————————————————————————————

—————————————————————————————

Today’s Global Overview (what you don’t need to know)

–  Markets await the response from the rating agencies and whether a Greek default would trigger CDS.

– European shares rose after Eurozone leaders reached an agreement for a second bailout of €109B for Greece. Financials especially in the UK, France, Portugal and Greece soared.

– Tech stocks also rallied after strong earnings from Microsoft.

—————————————————————————————

—————————————————————————————

– International Swaps and Derivatives Association (ISDA) general counsel stated that the IIF proposal for Geek debt exchange and buyback are voluntary and would not constitute a CDS credit event

– Italy’s Treasury said to be planning to extend December rule letting insurance firms NOT write down EU govt securities to market value

– Germany Finance Ministry stated that the June federal tax revenues rose by +9.6% y/y with the YTD rise coming in at almost 11%. The ministry reiterated that it would take necessary measures to ensure 3% deficit target for 2013 was achieved. It forecasted 2011 net borrowing at approx €30B. The MOF reiterated the view that German economic momentum would likely slowed markedly in Q2 as export momentum waned and industrial production to slow due to weaker foreign demand. It did stress that German domestic consumption to support further economic upswing

– ECB’s Nowotny commented that the Greek deal would help both Portugal and Ireland and reiterated that ECB could continue to accept bonds in selective defaults with certain guarantees

– France Fin Min Baroin: It is not an option for private sector contribution for Portugal and Ireland

– China NDRC State researcher reiterated the ‘cautiously optimistic’ view that inflation outlook would improve in H2as the current inflation cycle was near a turning point

– China President Hu: Reiterates policy of stability, continue prudent monetary and proactive fiscal policies in second half of year

– India Finance Ministry released a statement that inflation remainede a concern; The MOF stressed that both the Gov’t and central bank would take appropriate steps to bring inflation back to a more comfortable level

– Germany Econ Min Roesler commented that the planned flexibility of EFSF rescue mechanism was a ‘justifiable path’  but was important that EFSF purchases on the secondary market only possible within ‘tight boundaries’

– German CDU member Michelbach: Core parts of summit deal in line with German demands

– German Banking Association BDB stated that it believed that crisis contained with EU rescue package for Greece and to provide calm for the near future. It did seek clarification of important variables in private sector involvement. Creditor participation could create uncertainty.

– German IFO economist Abberger commented that business expectations in Germany had a clear downward tendency  with the country is on a good path for soft landing. The conditions have moderately worsened but did remain at high levels. Export expectations had been significantly correctly downwardly

– Greece’s Fin Min Venizelos commented that the country must continue with its austerity programs and continue applying economic adjustment programs and privatizations plans. He conceded that the country’s problems related to its economic growth and competitiveness. The Euro zone gave clear answer to markets yesterday at Summit and the country now has a sustainable debt situation. Greece borrowing needs covered through 2020. Capital support for Greek banks will be needed  and that the Greek bank recapitalization plan provided in new accord

– Fitch: Peripheral Euro Area Local & Regional Government Ratings Under Pressure

—————————————————————————————

– For the most part the price action seen in Europe today after yesterday’s sharp move. Markets digested the long-term implications of the EU Greek plan in a relative quiet session.

– The EUR/USD tested 1.4440 in late Asia with dealers noted that Far East sovereign names were buying Euros ahead of the session. One dealer noted that Korean Central bank was said to have purchased around $2.0B against KRW and this is usually a two-step process for reserve diversification purposes, hence a stronger Euro.

– The EU Summit on Greece continued to lift the EUR/CHF cross as it rose towards the 1.19 handle initially before it consolidated its move towards the lower end of the 1.18 level. The markets await the response from the rating agencies and whether a Greek default would trigger CDS.

—————————————————————————————

—————————————————————————————

– The Irish agency IDA Ireland reported that the Foreign Direct Investment (FDI) for the country increased 20% in the first half with 75 new investments against the 63 during the prior year (28 of which were set up in Ireland for the first time. The agency stated that it was on track to meet its full year targets.

– The British government is seeking to lower its borrowings this year to around £122 billion according to the Telegraph. This forecast is based on GDP growth of 1.7%. However, the consensus GDP growth forecast for the UK is only 1.3%, which could suggest that the treasury could collect fewer revenues. Some economists believe that the government needs to lower borrowing by approx £2 billion per month in order to hit this year’s borrowing target.

– The Telegraph’s Ambrose Evans-Pritchard noted that both France and Germany gave ground in order to craft new aid package for Greece. France ended its prior opposition to Greece defaulting, while Germany dropped its opposition to debt sharing. Germany agreed to turn the EFSF bailout fund into what is essentially equivalent to a European Monetary Fund, or an early stage version of an EU Treasury. In the new agreement, the EFSF will be allowed to intervene to help countries such as Italy and Spain if needed. The article suggested that the new bailout for Greece is an improvement over the first package, as the new deal involves interest rate relief.

—————————————————————————————

Looking at the news affecting day traders this morning, we have very little to be concerned with.  Today is a summer Friday during one of the slower weeks of the summer so volume will be a concern today.

With no major US news this morning all eyes on Canada and their retail sales at 830am est, which will likely bring some volume into the crude oil futures markets as well as the CAD currency futures.

The key today is watching the clock.  We like to trade through 1230pm est on normal trading days, but a summer friday we have to expect 1030am est will be about all we get today, most likely seeing low volume range-bound moves thereafter.  Set your alarm clock for 1030am today and get out of danger in the slowing markets.

—————————————————————————————

The US Dollar Index finds support this morning at 74.120 after falling lower on Thursday after news gave the EUR a boost.  The Dollar correlation is something we watch very closely on different timeframes to use in our trading decisions, and we see the dollar now trying to test the lows of this range on our 89range chart.

The big picture shows us the bear price channel and we just bounced off 74.120 and trading apparently sideways.  Now lets use the 13range chart to get a better idea of the short term trend so we know what the dollar is doing RIGHT NOW.

Our 13range chart gives us the detail we need to know more of whats going on.  You can see three things of interest on this chart; the medium term bear price channel, the short term bull price channel off the lows, and the white box defines the same trading range we found on the 89range chart.  This information will help me make educated decisions today using the Dollar Index Correlation.  As price is falling to new lows on the DX I want to be buying pullbacks with new highs on the markets I trade most.

Crude Oil Futures are in a mess this morning, and we saw this coming a mile away dating back to last week.  We know about this old price wedge (dotted yellow trend lines, 89range chart) which basically contains the big round number of 100.00 so we knew going into the wedge above 98.75 that 100.00 would be in the cards and it made it all the way up before collapsing back down again.  This is a very clear sign of speculation simply to hit 100.00 so we know this will be sloppy around this area, let that be the first warning right off the bat with it being a summer Friday.

The biggest clue we get to make money in this mess today is the price wedge marked in green trend lines, I can buy the lows 96.95, 97.75 and sell the highs 99.82 without getting into too much trouble.  the key will be avoiding the ‘No Trade Zone’ as well as the 98.75 area around the bottom dotted trend line and waiting for price to get up to the highs or down to the lows for the best opportunities.

Gold Futures look almost the exact same this morning as we did on Thursday morning.  Trading inside this transitional, sideways range, just waiting for the global marketplace to finalize an opinion of value on gold.

We know that many traders see more upside potential in the short term on gold, however, the slower summertime week we had this week gave people a chance to wait and see where this issue is going with Greece and the EU Bailouts that keep going back and forth.  If there was a single barometer for the ‘sentiment’ in the GLOBAL market it would be the US Dollar Index (DX) and Gold (GC).  You can see the chart clearly confirms we need to see some confidence in one direction or the other.

Once again, this is an easy market to trade if you can have the patience to wait for the best opportunities today.  Sideways markets are easy to trade just buy the lows 83.3,81.0, 76.2 and sell the highs 05.1, 10.8 of the range we are in, being very careful not to fall victim to the fake-out breakout above or below.

Looking closer at Gold we can get an easy plan of attack.  First, remember to be very careful at the all-time highs.  I won’t even go there as a new trader, it’s too sloppy.  We have a short term bear channel (selling will be high %) and the sideways range (inside day) to consider.  Sell the resistance levels overhead has price rises, so selling the PHOD 05.7, 07.4, 07.9,  and 1609.2 area as the highs, and then buy the lows of 84.9 , 81.1, 77.8 and 76.0 as support.  Also look to sell the highs of the price channel but beware the big round number of 1600.0 tends to be sloppy as well so give it some room to drop off 1600 before getting into a retracement on the short side.  Low volume today could also push price quickly down to the 1570.00 or up to new highs, we shall see where we go!