A.M. Update

Good morning. The overnight fireworks continue in China with the Shanghai Comp down as much as -8% overnight, closing - 5.9% after the PBoC promised everything but QE, with the Hang Seng -5.77% and the Nikkei -3.14% as China will certainly be a bigger deal than Greece, although to most US investors right now, it does't seem to feel that way. Nearly half of all Shanghai component stocks are halted so we can't even see the extent of the full selling.

However the big news the market is focussed on this morning is the Greek submission to the Troika for  a three-year loan from the European Stability Mechanism and promising to implement tax reform, and pension measures at the beginning of next week. It seems Greece who was given until the end of the week to submit a package, caved in this morning to seemingly, most if not all creditor demands with details to be elaborated on tonight or July 9th at the latest.

However it may not even be worth listening to the details as there's a growing alliance as mentioned this week, in fact Monday night in which Washington and the IMF which is part of the Troika, but run our of Washington is ever more involved in calling for a debt haircut of -30%. You may recall as I mentioned Monday night, Greece was at a deal with creditors until the IMF was the one who said Nein this time as they saw no sustainability in any deal without a debt haircut. Well as we had thought, Washington is more involved creating an alliance with France and Italy seeking a Greek debt haircut, but the biggest conflict is with Germany who may have just shot down any deal with the latest,

"the German government does not see any reason to grant Greece either a classic debt haircut or any other measures that would slash the value of money on loan to the crisis-ridden country, a spokesman for the finance ministry said on Wednesday."

So I suppose this may be part of the market's new information and nervousness we observed yesterday, that "something" that seemed to have changed in the market's tone yesterday.

Overnight S&P futures have been a roller coaster...

The red arrow is yesterday's cash close at 4 pm, since we have seen some serious downside and a recovery attempt around the European open, surely there will be some trend change around the European close. However, for now the market doesn't seem to be reacting very strongly to either recent headline this morning that Greece will seek a deal and start implementing measures as early as next week or the apparent killing of any deal with the Troika by Germany.

The 5 min Index future charts which are the minimum divergence for putting on a trade are if anything, showing extreme parabolic type movement this week as you see at the red arrow. Rather than going positive yesterday as would be expected at a head fake move, indeed we can se at least 2 distribution/negative divergences at the parabolic highs, I NEVER trust these kinds of moves.

As I said yesterday , the 5 min charts can go positive in hours so we'll keep watching for that or any other message of the market, but at the moment the lack of reaction over the last hour or two and the lack of strong signals looks like the market is in a holding pattern trying to figure out the next step in an ever increasingly complicated geo-political situation that is Greece. As predicted Monday night, Washington is now smack dab in the middle of the issue and for obvious reasons (the Greek pivot to Russia/China).

Nothing has changed from our perspective, we'll continue to watch the message of the market and look for the edge, if you don't know what your edge is, you don't have one and there's no reason to put on a trade, but that never lasts long.