Greek Drama

Looking back since last Friday's The Week Ahead post in which rather than the usual "best data of the week" we receive the last 2 hours of Friday, there was little to nothing and we had to instead look to the highest probability conceptual outcome.

This week we have looked for solid signals and had few, however yesterday we looked to sharpen the analysis a bit based on what I would call evidence of the unobservable, like astronomers who are able to tell there's a planet orbiting a far away star because of not visual confirmation of the planet itself, but the effects the planet has on other forces such as light refraction and orbital changes due to gravity, those posts from yesterday were here, Message of the Market and here, Market Update and Leading Indicator Update.

However as the Greek drama unfolds, this unprecedented week of weak to no signals (which we see from time to time for a day or two, but not a week), is in fact because of the Greek/IMF payment tomorrow and the possibility of a Greek default. The ideal situation is still the one proposed in Friday's The Week Ahead, even if it comes from some sort of Greek relief rally, however from the looks of Credit and VIX futures (see both here from earlier today, Volatility / VXX which will show you both VIX action and HY Credit risk off posture) it may not be just Greece the market is worried about, but the Non-Farm Payrolls due out at 8:30 tomorrow morning as we approach the much speculated, June 15/16th F_O_M_C. This is the last major employment data before the June meeting.

I'm a bit quiet on posts today, that's not because I'm sitting back waiting, it's because I'm much busier than normal going through charts looking for what the crowd might have missed. However for now, it seems the market is quite concerned not only by HY Credit implications, but VIX futures about not only Greece, but Non-Farm Payroll data and the effect they mat have on a June Rate Hike, something the IMF virtually begged the F_E_D to put off until the first half of 2016 today.

As for Greece, the Troika submitted it's best and final proposal yesterday, it "seems" the Greeks consider it a red line they won't cross, I don't know how that beats default, but Syria has shown themselves to be incompetent amateurs since elected. You don't bluff the Troika without a plan B, which I always assumed they'd have, apparently they don't.

There's some talk of a new proposals Syriza is looking over today and a technicality that may allow them to avoid default by requesting the IMF bundle June payments rather than have tomorrow's payment due, all June payments would come due in a few weeks buying the Greeks some more time, while the IMF seems to feel confident that Greece will make their payment on time.

These are wold card events and I suspect the market has been on the sidelines which is the reason we've had so few decent signals in the very low volatility equity markets, notice we have been trading more in Energy and other markets that are much higher on volatility recently.

An example of Cross-asset volatility...

Compared to oil/USO, I think it would be foolish to try to trade the averages right now without strong signals, we wouldn't have achieved yesterday's 40% gains and today's +45% gain in equities/the averages, the volatility is imply not there.

Cross asset volatility.

In any case, I just wanted to check in with you, let you know I am here, I'm just not willing to post to take up space and your time unless I have something that has an edge you can use. Until then, I continue to look for whatever the crowd might have missed as well as any other opportunities no matter where they are.

For now, Greece is a wild card out of our hands. The NFP tomorrow morning may not be the same, that may be leaked and that may be "part" of the reason the VIX short term futures have put in decent gains today with strong signals otherwise.