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July 10, 2015 Newsletter

July and August futures markets outlook by trade the news along with futures trading chart of the week

July 10th, 2015 - Issue #793

In This Issue

1. July-August Outlook: Four for July
2. Hot Market Report: Bearish Chart Pattern in Nymex Crude Oil
3. Economic Calendar

1. July-August Outlook


TTN July-August 2015 Outlook: Four for July

by TradeTheNews.com

The equivalent of a financial police radio, TradeTheNews.com covers economic numbers, interest rate decisions, stock up/down grades, rumors, central banker speak, energy news, terrorism, geopolitical developments and natural disasters in real-time.

For a free trial of market breaking news, SP500 SQUAWK box and much more, visit:

Trade the News

Events of the last two months have been erratic, not falling neatly into their expected grooves. The race to keep Greece in the euro zone has turned into a marathon as the protest government of Prime Minister Tsipras has refused any deal without debt relief. The UK election confounded all prognostication, ending in a landslide victory for the incumbent Parliament and creating another wedge issue for Europe in the form of a campaign promise of a referendum on Britain's membership in the EU, which could come as soon as next year. US economic data hasn't rebounded enough from the tough first quarter to give market watchers faith that Fed rate lift off will come this year. Nuclear talks with Iran seem to be making good progress, but the June 30 deadline had to be pushed back, and it is still not clear if any accord will satisfy a wary US Congress. China's actions were a little more predictable, throwing on some more incremental stimulus, but talk of a Chinese quantitative easing program has died down for the time being. With many of the biggest questions of the first half of 2015 yet unresolved, four issues will continue to hound the markets during the summer months. First among them is coming divergence in central bank policy as the Fed looks to start tightening while its peers keep a steady or even increasing flow of stimulus. Economic data in the next two months will crystallize what is currently still an uncertain path for the Fed. Second, weak global inflation brought on by labor slack and a downward oil shock will continue to be a leading determinant of central bank policies in this period. Third, is the continuous retuning of Chinese economic policy in the face of increasingly wild stock market gyrations. Finally, the wider fallout from the Greek drama will also shape the months ahead.

Independence Day for Greece?



There is yet one more lap to go in the Greek marathon. Press reports in late June indicated that the two sides came tantalizingly close to an accord, but Athens backed away when it couldn't extract a promise of debt relief. The Greek leadership using terms like "blackmail" and "terrorism" to describe the tactics of other euro zone ministers poisoned the well, as did their surprising plan to call for a referendum on the talks, which brought negotiations to a halt for most of the last week. At the same time the IMF threw a monkey wrench into the proceedings, issuing a report that said Greece would require a 30% debt haircut to meet sustainability targets set in 2012, bolstering Athens call for debt relief. Tsipras secured a 'no' vote in the referendum, which he has insisted will bring better deal terms, though many euro zone officials have said quite the opposite. Greece is now in arrears on a €1.7 billion bundled payment owed to the IMF in June, but the point of no return may be July 20, when Athens is scheduled to make a €3.5 billion payment to the ECB. Failure to make this next debt payment is seen as more critical because, unlike the payment owed to the IMF, it would trigger cross-default clauses affecting Greece's debt to private creditors and other EU institutions. A 30-day grace period provides a small additional time cushion, but missing the initial deadline will ratchet up the chances of an accidental Grexit. After a default, the ECB would no longer be able to extend any emergency liquidity assistance (ELA) to Greek banks, at which point Greece would probably resort to IOUs and have to make preparations for reverting to the drachma. As the date of the ECB payment approaches the financial situation in Greece could deteriorate rapidly as banks are already running low on cash despite the capital controls that have been implemented. The situation will become clearer as talks resume in the days after the referendum. Reports have indicated that the creditors plan to take an even harder line on Greece when it presents new proposals this week. In an apparent olive branch to creditors, Tsipras has sacked his prickly finance minister Varoufakis, who was widely detested by the rest of the Eurogroup. But without more concessions from Athens, the euro zone may be resolved to cut Greece loose. The euro will likely see more volatility if Greece remains stubborn about deal terms. If Tsipras can't reach a deal with creditors, a Grexit will send ripples through the currency markets, but it may be a two way trade. Many analysts have speculated that in the event of a Grexit, the euro could briefly weaken on concerns about the future of the currency union, but then would strengthen sharply due to the fact that the EMU is a more robust economic block without its weakest member. Ironically, that stronger euro may feed into the Tsipras government's predictions that ousting Greece would be very costly, as a stronger currency could trip up Europe's fledgling recovery. Greece's economy is one of the smallest on the continent, and thus far European officials have expressed confidence that any contagion will be limited and the ECB has stated that its prepared to provide a firewall if necessary. Things will get even more complicated and uncertain if Greece does give up the euro. There are no explicit provisions for leaving the monetary union that ECB President Draghi once declared "irreversible," and Greece could take legal action in the European Court of Justice to slow down the process and maximize the pain for the euro zone. The longer term fallout of a Greek exit has implications for the future of a more cohesive Europe. If Greece can leave, then other peripheral nations like Portugal or Spain could threaten to take the same route. A new poll shows that Spain's upstart anti-austerity party Podemos is in a dead heat with the ruling party with less than six month until the general election. Yet another layer of European unity is threatened by the question of whether the UK will upset the stability of the EU club when it holds its referendum on membership within the next year or two. It is clear then why euro zone leaders want to keep Greece in the zone, since pulling at these threads could unravel the whole concept of "more Europe."

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2. Hot Market Review - Bearish Chart Pattern in Nymex Crude Oil

From our friend Jim Wyckoff

Jim has an excellent daily newsletter where he reviews different markets, alerts you for potential trades and much more. Included is his great bi-weekly newsletter with charts and a little longer term outlook. We recommend checking out his website, educational CDROM, and services at www.jimwyckoff.com Click on image below to enlarge

bearish patterns in crude oil;See on the daily bar chart for August Nymex crude oil futures that prices have sold off sharply recently, and then paused late this week on some short covering. The late-week price action has formed a bearish pennant pattern on the daily chart. My bias still is that crude oil prices will hit $50 a barrel, or below, in the coming weeks. Stay tuned!

3. Economic Calendar

Source: Moore Research Center, Inc.

Date Reports Expiration & Notice Dates
07/13
Mon
1:00 PM CDT - Treasury Budget(Jun)
LT: Jul Eurodollar(CME) Jul Orange Juice(ICE)
  
07/14
Tues
7:30 AM CDT - Export(ex-ag) & Import(ex-oil) Prices(Jun)
7:30 AM CDT - Retail Sales(Jun)
7:30 AM CDT - Retail Sales(ex-auto)(Jun)
9:00 AM CDT - Business Inventories(May)
  
LT: Jul Canola(CBT)
Jul Corn(CBT)
Jul Oats(CBT)
Jul Rough Rice(CBT)
Jul Wheat(CBT)
Jul Soybeans,Soymeal,Soyoil(CBT)
07/15
Wed
6:00 AM CDT - MBA Mortgage Purchase Index
7:30 AM CDT - Core PPI & PPI(Jun)
7:30 AM CDT - Empire Manufacturing(Jul)
8:15 AM CDT - Capacity Util & Industrial Prod(Jun)
9:30 AM CDT - API & DOE Energy Stats
11:00 AM CDT - NOPA Crush
1:00 PM CDT - Fed's Beige Book(Jul)
2:00 PM CDT - Dairy Product Sales
LLT: Jul Lean Hogs(CME)
Jul Lumber(CME)
Jul Lean Hogs Options(CME)
Aug Platinum Options(NYM)
Aug Palladium Options(NYM)
Aug Sugar-11 Options(ICE)
07/16
Thurs
7:30 AM CDT - USDA Weekly Export Sales
7:30 AM CDT - Initial Claims-Weekly
9:00 AM CDT - NAHB Housing Market Index(Jul)
9:00 AM CDT - Philadelphia Fed(Jul)
9:30 AM CDT - EIA Gas Storage
3:00 PM CDT - Net Long-Term TIC Flows(May)
3:30 PM CDT - Money Supply
 
FN: Jul Lumber(CME)
LT: Jul Cocoa(ICE)
Aug Crude Lt Options(NYM)
07/17
Fri
7:30 AM CDT - Building Permits & Housing Starts(Jun)
7:30 AM CDT - Core CPI & CPI(Jun)
9:00 AM CDT - Mich Sentiment(Jul)
 
LT: Jul Nikkei Options(CME)
Jul DJIA Options(CME)
Jul S&P 500 Options(CME)
Jul E-Mini S&P 500 Options(CME)
Jul NASDAQ Options(CME)
Jul E-Mini NASDAQ Options(CME)
Jul Russell Options(CME)
Aug Orange Juice Options(ICE)
07/20
Mon
 
  

  

* Please note that the information contained in this letter is intended for clients, prospective clients, and audiences who have a basic understanding, familiarity, and interest in the futures markets.

** The material contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.

*** This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading!

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