A.M. Update

I hope everyone had a pleasant and safe 4th of July weekend.

The Greek referendum as you are likely well aware was a landslide for the "No" to austerity crowd or really on "No" to the question of whether the Greek government should accept the austerity deal the Troika was offering or refuse it, refusing the deal was the message of Greek voters in hopes of something better.

Interestingly as futures opened yesterday after the Greek vote news was out, they were down -1.5% in SPX futures, however something looked decent in the charts that they'd close the gap overnight, I first assumed it to be the PBoC intervention in Chinese markets which managed to hold the SHCOMP green, but every other market in China was red. It seems it was the Greek Finance Minister's resignation that had the market excited for a bit. This was a 50/50 chance, he had already said he'd resign if the Yes vote won, but apparently Prime Minister Tsipras told Varoufakis shortly after the vote results that it was the preference of certain creditors and partners that he not be present in future negotiations, that's called thrown under the bus, but it may have also been a foregone conclusion as of Thursday that Varoufakis would be gone either way. We don't have the information smart money has, but we can often see what they are doing and in our Week Ahead forecast, although looking very uncertain, the most probable outcome looked like early price strength this week.

I wouldn't say we are exactly there and there's some discord in the charts right now, but it's usually the cash market where the charts matter the most and have the best signals.

 S&P futures opening the new week for trade with a gap down 1.5% at the red arrow. Varoufakis resignation at the white arrow sent futures higher and a small negative divergence around 4 a.m. stemmed the rally. More or less the same can be seen in EUR/USD, although with a bit more detail, you can see it has been leading SPX futures.

EUR/USD gapping down, up on Varoufakis' resignation , a negative divergence shortly after the European open and a small positive divergence now.

For the moment this leaves the market in a place in which it could make a significant bounce or it could make a significant decline.

I'm not one to make partly cloudy forecasts, but because of where price is right now, it can go either way and sharply. We'll have to gather more evidence of the charts now that the Greek vote is over, this is why I didn't add to any speculative long positions Friday , not the Greek vote, the hesitation on the charts.

I imagine that will clear up quickly and we'll know which short term outcome is more likely, but while the market is focussed in on Greece in the near term, it is missing the bigger picture that is China.

The last week China has had to literally threaten managers not to sell stock and go all in with everything except QE just to keep losses in the horrifying range. This is the big story for the market's bigger picture beyond our own horror story and the market is missing it for Greece.

This too will be ever more increasingly reflected in the charts. A market crash in China is not just a market crash, but the potential for mass civil disfunction.

More as the cash market opens...