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Greece issues getting serious

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Stocks opened sharply lower on Monday and barely caught a bid as the indices drifted down all day, closing near the lows. The Dow ended the day down 350-points, or about 2%, and the broader indices were down slightly more. The run for the banks, small limits on withdrawals, empty ATMs, and bank closings in Greece were the culprit as we have seen unfold for several days now - or in reality, years.

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The F-fund benefited from the selling as investors opted for more safety in bonds. We know bonds have been in a downtrend so that could be temporary, but money has to flow somewhere.

China's Shanghai Index was down another 3.3% yesterday and now problems with Puerto Rico not being able to pay their debt gets added to the list of global economic concerns.

The jobs report will be released on Thursday this week because of the holiday on Friday. Estimates are looking for a gain of 230,000 jobs, and an unemployment rate of 5.4%.

The SPY (S&P500 / C-fund) fell through the intermediate-term support line and looks to have the 200-day EMA in its sites. There is an old open gap near 200, but that's a long way away and we'd have to be hitting levels not seen since early February to fill it.


Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk


Volume was very high and often that triggers a short-term bottom, but not always. This was really just day one of the Greece scare, and with their banks being closed for the rest of the week, we could continue to see uncertainty
prevail. That is unless there is some kind of deal struck, which is how it has worked for the last several years. Panic. Deal. Repeat.

The weekly chart remains above the 50-week EMA, but we are starting to see more of a rounded top than a rising trading channel. The channel is not broken yet, but we do have some warning signs for the intermediate to longer-term.



Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk


The
Dow Completion Index (S-fund) gapped down and lost 2.3% on Monday. It is just about to test the longer-term support line. There has been some technical damage done but nothing is broken yet - outside of the 50-day EMA.


Chart provided courtesy of www.stockcharts.com
, analysis by TSP Talk


The Dow Transportation Index has been the canary in the coal mine and it has now broken another level of support when the bear flag broke down yesterday. This index is in a bear market so bearish outcomes should not be a surprise. It is also a market leader, so that's a concern that has lingered longer than normal.



Chart provided courtesy of www.stockcharts.com
, analysis by TSP Talk


The
EFA (EAFE index / I-fund) lost over 3% on the day but some strength in the dollar helped the I-fund stay in the range of the U.S. fund losses. There's a new large gap overhead that should eventually get filled. It has closed below the 200-day EMA for the first time since early March.


Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk

The dollar opened higher but it quickly reversed course. I didn't see any fundamental reason for the dollar to fall against the euro, but the lure of the open gap may have proved to be too strong.



Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk


T
he AGG (bonds / F-fund) jumped 0.59% yesterday and it is now testing the bottom of the bear flag and multiple resistance in a descending trendline and the 200-day EMA. There is a little more room to rally, but the technical picture is pretty bleak here so the odds favor this being a short-term move. If it continues higher it might be at the expense of more severe selling in stocks.


Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk


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Thanks for reading! We'll see you back here tomorrow.


Tom Crowley


Posted daily at www.tsptalk.com/comments.php

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