Ahead of the open, (26-06)

Our weekend comment in respect to upcoming EU summit, “…expectations…might be too high now.  Whatever they produce may not satisfy the markets any longer…” were taken a notch higher past our underwhelming premise by Soros’ comments ..” warns that the summit this week could wind up being a “fiasco which may well prove fatal…”. Adding more premarket downside fuel were German leaders comments that investors are hoping too much for ‘ easy solutions’ (most significantly the wish for shared liability).   The importance of Soros’ comments is simply because it is becoming the overwhelming market narrative, although not as extreme.  A building block it may only be with final solutions only coming at later summits.   Only hope now is for a credible step, a step the market may just accept and live with as the week proceeds. 

 

Another leg lower hit at the opening bell and 10 minutes into the trading day market broke through last week’s lows and was in jeopardy of a 50% retracement of the June rally.(SP1315 off 20 handles). By lunch hour with 20MA easily sliced through already support at SP1309 was being tested.. “..see market headed into Q3 downside. Firstly, SP1300 on downside break of recent ~1309 low of ‘crammed soldiers together.”.  Some stabilization was found at these ~1309 June levels.

  

All in, the downside action isn’t panicked as lowered expectations get priced in quickly allowing for bounces here and there, but overall market lies in an air pocket (growth clouds included) with little in the way of inflating it higher for any duration.