“The wording of this document [Four-Page Text of the Eurozone Demands on Greece] makes it clear Germany wants to push Greece out of the eurozone…In contrast Greece has no chance of restructuring if it accepts all of the…demands. Tsipras would be a fool to accept this proposal. As I have said all along, Greece's best chance is to default, not pay back a cent, and initiate the reforms it needs to grow over the long haul. Greece does not need the euro. No country does.” – Mike Shedlock. Great summary of demands and Mike’s thoughtful commentary at…
http://globaleconomicanalysis.blogspot.com/
My cmt: But that’s not what Tsipras did – he agreed to the demands. Today, Mike Shedlock wrote, “The fact that a formal Grexit may have been avoided for the moment is immaterial. Grexit will be back on the table when you have the slightest political accident — and there are still many things that could go wrong, both in Greece and in other eurozone parliaments. Any other country that in future might challenge German economic orthodoxy will face similar problems. ” As members comment, "We will soon be asking ourselves whether this new eurozone, in which the strong push around the weak, can be sustainable". – Monday’s Mike Shedlock commentary at…
http://globaleconomicanalysis.blogspot.com/
Then there’s China with its ongoing stock market crash…
CHINA (Credit Bubble Bulletin)
“I’ve expected the bursting of the Chinese Bubble to be “frightening.” It’s commenced. I never really contemplated things would quickly turn so bizarre. “Revive the A shares, benefit the people.” Investigating “malicious short selling.” The banning of selling by large holders and company insiders. Forcing institutions to buy. Blaming rumor-mongering and foreign meddling. Media gag orders against negative reporting. Widespread trading halts and illiquidity. And the bear market is barely underway… So much in China is Broken.” Commentary at…
http://creditbubblebulletin.blogspot.com/2015/07/weekly-commentary-broken.html
My cmt: Market confidence is ruined. I saw an interview not long ago on CNBC where a Chinese investor (most of their stock is owned by small investors) said if the market went up he would get out. That attitude is why the market can’t go up much: too many investors will sell as the markets move up, IF they move up. This won’t be over until stocks lose more than 50% of their prior price and possibly much more.
China’s problems are likely to spill over and affect the US eventually. We’ll see. The immediate concern is earnings season that is just getting started.
MARKET REPORT/ANALYSIS
-Monday, the S&P 500 was up about 1.1% to 2100 at the close.
-VIX was down about 17% to 13.90.
-The yield on the 10-year Treasury was up to 2.43%.
BREADTH AND UP-VOLUME. The 50-dma of advancing stocks climbed to 49% Friday. (Below 50% is a bad for the stock markets.) In the last 10-days, 48% of the total volume on the NYSE has been up-volume. (That stat was 43% Friday.) Both of these need to be above 50% to indicate a healthy market, but they have been rapidly improving.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) climbed to 50% at the close Friday. (A number below 50% is usually BAD news for the markets.
New-highs outpaced New-lows Monday. The spread (new-highs minus new-lows) was +41. (It was -15 Friday.)
The 10-day moving average of change in the spread rose to +15 Monday. In other words, over the last 10-days, on average; the spread has INCREASED by 15 each day.
Internals switched to POSITIVE on the markets.
Market Internals are a decent trend-following analysis of
current market action, but should not be used alone for short term trading.
They are usually right, but they are often late. They are most useful when they diverge from
the Index. In 2014, using these
internals alone would have made a 9% return vs. 13% for the S&P 500 (in on
Positive out on Negative – no shorting). Of course, few trend-following systems will do well in an extreme low-volatility, nearly straight-up year like 2014.
NTSM
I issued a BUY signal based on improved market internals Monday.
MY INVESTED STOCK POSITION
On Monday, 13 July, I increased my investments from 30%
invested to 50% invested in stocks. I spilt stock investments roughly equally
between S&P 500, Euro/pacific ETF (EFA), and the Dow Jones Completion Index
(DWCPF) as noted in today’s earlier post.
TSP ALLOCATION (This is a conservative position most appropriate for retirees or very conservative investors.)
G-Fund (Risk-free yielding 2.1% over the last 12-months): 50%
C-Fund (S&P 500): 15%
S-Fund (DWCPF): 15%
I-Fund (EFA): 20%
