Bear Radar

Style Underperformer:

• Mid-Cap Value -.31%

Sector Underperformers:

• 1) Utilities -1.54% 2) Semis -.96% 3) Networking -.66%

Stocks Falling on Unusual Volume:

• GLOP, WSR, SONC, SNR, YDLE, USLV, NNBR, NYLD, AMED, WMB, EPZM, LHCG, POZN, ADT, AET, WLDN, EGRX, AFAM, COUP, CUK, ANTM, IBP, TDC, TCON and CHH

Stocks With Unusual Put Option Activity:

• 1) AMAT 2) KBH 3) AET 4) TGT 5) MMM
  

Stocks With Most Negative News Mentions:

• 1) WDC 2) PM 3) CHH 4) WMT 5) ADT
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Value -.10%

Sector Outperformers:

• 1) Steel +.69% 2) Retail +.46% 3) Social Media +.45%
  

Stocks Rising on Unusual Volume:

• GDOT, EYES, AMBA, MOMO, NVAX, CEMP, KEYW and TTPH

Stocks With Unusual Call Option Activity:

• 1) CNX 2) GNW 3) NLY 4) XOMA 5) GDXJ
  

Stocks With Most Positive News Mentions:

• 1) T 2) DTV 3) GDOT 4) FB 5) ZUMZ
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Morning Market Internals

NYSE Composite Index:

• Volume Running 7.2% Below 100-day average
• 4 Sectors Rising, 6 Sectors Declining
• 51.1% of Issues Advancing, 45.7% Declining
• 123 New 52-Week Highs, 37 New Lows
• 52.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 45.4
• Vix 12.4
• Total Put/Call .84
• TRIN/Arms .66

Tuesday Watch

Evening Headlines 

Bloomberg:  

• Greece’s Split With Creditors Said to Come Down to Catering VAT. Sales tax on catering may be the largest difference between Greece and its creditors as they negotiate rescue arrangements this week, according to two European Union officials. The rate of value-added tax is the main sticking point to getting a deal, with Greece’s proposed target for 2016 still some way short of creditor demands. Creditors want savings from VAT in 2016 of 1 percent of gross domestic product and this could be achieved by raising sales tax on catering to a rate of 23 percent from 13 percent, both officials said. Greece has proposed measures that would net 0.74 percent of GDP, the first diplomat said.
• Sticking Points & Progress Made in Greek Debt Talks: Fact Sheet.
• Euro Drops as Greece Deal Would Revive ECB-Fed Policy Divergence. The euro fell as Goldman Sachs Group Inc. said the European Central Bank’s quantitative easing program will send the currency toward parity against the greenback, even in the event of a debt deal for Greece. “We thus see Greece as a catalyst for EUR/$ to go near parity, via stepped up QE that moves rate differentials against the single currency,” Goldman strategists including Robin Brooks wrote in a report published June 22. The single currency fell 0.6 percent against the greenback to $1.1269 as of 12:09 p.m. in Tokyo. Bloomberg’s Dollar Spot Index, which tracks the U.S. currency against 10 peers, advanced 0.4 percent to 1,173.55.
• China’s Small-Cap Stocks That Led Rally Set to Enter Bear Market. The ChiNext index of smaller companies in Shenzhen was poised to enter a bear market amid concern investors were unwinding margin bets in China’s most expensive stocks. The 100-member gauge slid as much as 4.8 percent Tuesday, extending its loss from its June 3 peak to more than 20 percent. The index, which is dominated by technology shares, pared declines to 2.5 percent at the 11:30 a.m. local-time break. The ChiNext traded at a record 131 times reported earnings this month, five times the level of the Shanghai Composite Index, after the small-cap gauge tripled in just 12 months.
• China’s Stocks Plunge, Extending Steepest Slump in Seven Years. China’s stocks tumbled, extending their biggest weekly drop since the global financial crisis. The Shanghai Composite Index fell 3.5 percent to 4,323.34 at 11:14 a.m. local time. The gauge plunged 13 percent last week, the fastest pace among global equity gauges, amid concern valuations were unsustainable and initial public offerings were luring funds from existing equities. The ChiNext gauge of smaller companies plunged 3.5 percent, taking declines from its June 3 record to 19.9 percent, approaching a bear market.
• Asian Stocks Rise Fourth Day on Optimism About Greece Debt Talks. Asian stocks rose, following a rally in global shares, as Greece’s new measures to appease its creditors fueled optimism a deal will soon be reached. The MSCI Asia Pacific Index added 0.1 percent to 148.71 as of 9:00 a.m. in Tokyo after jumping the most in two months on Monday.
• Planet Fitness Files for Initial Public Offering of Gym Chain. Planet Fitness Inc., the $10-per-month gym chain, filed for an initial public offering in the U.S.

Wall Street Journal: 

• Governor: Time to Furl Flag. Lawmakers in South Carolina asked to take down Confederate symbol after shooting. South Carolina Gov. Nikki Haley called on Monday for the Confederate battle flag to be taken down from the Statehouse grounds, five days after the killing of nine African-Americans in a historic church. “We are not going to allow this symbol to divide us any longer,” Ms. Haley said, applause erupting as she spoke, flanked by more than 30 state political leaders in the lobby of the Statehouse.
• Trade Bill Faces Hour of Truth in Senate. Republican leader Mitch McConnell schedules Tuesday vote on fast-track bill, hopes to draw enough Democrats.
• Cheap Energy Poised to Shake Up Pipeline Industry. Williams(WMB) spurns $48 billion offer from rival, setting stage for others to bid. Low oil-and-gas prices are poised to shake up yet another part of the nation’s energy economy, spurring a merger battle among companies that own the key pipelines that move fuels around the country.
• Why the Recovery Still Limps Along. A state-by-state analysis shows that market-oriented policies work. Too bad more states aren’t using them.

Fox News: 

• National support pours in for Charleston, other AME churches in wake of attack. Support poured in from around the nation to the historically black church in Charleston, S.C., and other mainly African-American houses of worship in the wake of last week's shooting that left nine people dead during a Bible study meeting.
• New low: ISIS reportedly gives away sex slaves as 'prizes' in Koran contest. (video) ISIS has already committed countless unspeakable acts on Yazidi and Christian girls and women in Iraq, but the terrorist army may have reached a new low with a twisted new contest in which female slaves captured in war are given away as "prizes" to fighters who show the have mastered the Koran.

CNBC: 

• Latest on Greece: 48 hours to craft a deal.

Zero Hedge:

• Greece Capitulates: Tsipras Crosses "Red Line", Will Accept Bailout Extension.
• The NAR Sees "No Housing Bubble", So Here Is A Look At NAR's History Of Absolutely Disastrous Forecasts. (graph)
• Chinese Crash Continues After PBOC Cracks Down On Brokerage Liquidity. (graph)
• Wealthy Greeks Slam "Incompetent Communists Ruining The Country", Demand EU "Save" Greece.
• $140 Billion Bond Fund Goes To Cash As It "Braces For Bond-Market Collapse". (graph)
• The Fed Confirms It Is Above The Law: Yellen Tells Hensarling "No" On Leak Probe Documents.
• CEOs Now Make 300 Times More Than Their Employees (Again). (graph)
• The Euro "Young Adults Living With Their Parents" Zone.
• "Greece Is Rescued" Euphoria Fades After Europe's Close, Nasdaq Record Highs. (graph)

Business Insider:

• Think of it as housing bubble 2.0. (graph)
• Container shippers from China to Europe are experiencing the biggest 'rate collapse that this trade has experienced'. (graph)
• People in Greece are starting to say the words 'civil war' in a non-jokey way.
• Colleges are banning smartwatches to cut down on high-tech cheating.
• Corporate defaults are here.

Telegraph: 

• Greek bank run fears escalate as eurozone ministers openly discuss capital controls. Belgium's finance minister admits eurozone is considering draconian measures to stop banks from going bust as Tsipras swallows austerity.

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are -.25% to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 106.0 -3.0 basis points.

• Asia Pacific Sovereign CDS Index 57.5 -3.75 basis points.

• S&P 500 futures +.26%.

• NASDAQ 100 futures +.25%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (BBRY)/-.04
• (CCL)/.16
• (DRI)/.93
• (IHS)/1.45

Economic Releases

8:30 am EST

• Durable Goods Orders for May are estimated to fall -1.0% versus a -.5% decline in April.
• Durrables Ex Transports for May are estimated to rise +.5% versus a +.5% gain in April.
• Capital Goods Orders Non-Defense Ex Air for May are estimated to rise +.5% versus a +1.0% gain in April.
  

9:00 am EST

• The FHFA House Price Index for April is estimated to rise +.5% versus a +.3% gain in March.

9:45 am EST

• Preliminary Markit US Manufacturing PMI for June is estimated to rise to 54.1 versus 54.0 in May.

10:00 am EST

• New Home Sales for May are estimated to rise to 523K versus 517K in April.
• The Richmond Fed Manufacturing Index for June is estimated to rise to 4.0 versus 1.0 in May.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Powell speaking, Eurozone PMI, $26B 2Y T-Note auction, weekly US retail sales reports, CSFB Ag/Chemicals conference, Oppenheimer Consumer conference, Global Hunter Energy conference, JMP Securities Life Sciences conference and the (MO) investor day could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and technology shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.

Stocks Rising into Final Hour on Plunging Eurozone Debt Angst, Buyout Speculation, Short-Covering, Financial/Biotech Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 12.63 -9.53%

• Euro/Yen Carry Return Index 146.11 +.51%

• Emerging Markets Currency Volatility(VXY) 8.95 -.44%

• S&P 500 Implied Correlation 62.63 -1.21%

• ISE Sentiment Index 163.0 +94.05%

• Total Put/Call .89 -2.20%

• NYSE Arms .65 -63.76% 

Credit Investor Angst:

• North American Investment Grade CDS Index 65.05 -4.44%

• America Energy Sector High-Yield CDS Index 1,520.0 -2.22%

• European Financial Sector CDS Index 78.46 -12.69%

• Western Europe Sovereign Debt CDS Index 24.92 -13.70%

• Asia Pacific Sovereign Debt CDS Index 57.70 -5.75%

• Emerging Market CDS Index 303.33 -2.33%
  

• iBoxx Offshore RMB China Corporates High Yield Index 120.66 +.06%

• 2-Year Swap Spread 24.75 -.5 basis point

• TED Spread 27.5 -1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -18.25 +1.0 basis point

Economic Gauges:

• 3-Month T-Bill Yield .00% unch.

• Yield Curve 171.0 +6.0 basis points

• China Import Iron Ore Spot $60.02/Metric Tonne -2.18%

• Citi US Economic Surprise Index -38.0 -2.0 points

• Citi Eurozone Economic Surprise Index -6.60 -3.8 points

• Citi Emerging Markets Economic Surprise Index -16.30 +.6 point

• 10-Year TIPS Spread 1.93 +4.0 basis points

Overseas Futures:

• Nikkei 225 Futures: Indicating +172 open in Japan 
• China A50 Futures: Indicating n/a open in China

• DAX Futures: Indicating -3 open in Germany

Portfolio: 

• Higher: On gains in my biotech/retail/medical sector longs

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 75% Net Long

Today's Headlines

Bloomberg:

• Greek Optimism Tempered by Finance Chiefs. (video) Euro-area finance chiefs tempered optimism that a deal on Greece was in the offing, saying expectations of a breakthrough were inflated amid confusion over new proposals intended to unlock aid. With markets surging on speculation an accord was near, ministers closed ranks to douse hopes of an imminent deal as they arrived for a meeting in Brussels on Monday. Dutch Finance Minister Jeroen Dijsselbloem said it was “impossible to have a final assessment” of the Greek proposals since they had arrived so late, while his Irish counterpart, Michael Noonan, said he expected ministers to have to meet again on Thursday.

• Greek Parliament Vote Is Indispensable to Aid Deal, Germany Says. Germany outlined its terms for parliament to approve any aid deal for Greece, including a demand that Greek lawmakers take the first step by passing economic policy changes. Time is too short for a “normal parliamentary procedure” in Germany in the “last days” before Greece’s aid program expires on June 30, the Finance Ministry said in a document prepared for euro-area officials. While German lawmakers can invoke a fast-track procedure, that is likely to depend on the “quality and persuasive power” of an agreement with Greece, according to the document obtained by Bloomberg.

• Greek Headline Fatigue Numbs Investors to Mask Euro’s Downside. Headline fatigue may be the biggest risk to investors from the Greek debt saga. Money managers lulled into a sense of complacency amid dragged out negotiations to avert a default will be shaken from their malaise by euro losses, should the heavily indebted nation exit the 19-member currency union, according to Guillermo Felices, head of asset allocation in Europe at Barclays Plc. “Maybe we’re all being a bit too over-optimistic,” said Chris Gaffney, president at EverBank World Markets in St. Louis. While most believe a solution will be found, “the worry is the contagion effect.” Of 899 hedge funds, money managers and other trading desks surveyed by Barclays this month, more than half forecast only “a small negative” from Greece leaving the common currency, thanks to its minor contribution to regional growth and buffers to limit contagion. A further 28 percent see contagion limited to peripheral economies.

• Greece ‘Certain’ to Stay in Euro Region This Year, Odds Signal. Worried about a Greek exit from the euro region ruining your summer vacation plans? Fret no more, it isn’t going to happen. At least that’s what bookmakers say. Betfair Group Plc puts the odds of Greece not leaving the euro zone this year at 1/5, meaning a successful 5 pound bet wins 1 pound. William Hill Plc is offering 1/4 Greece will stay in the euro area in 2015.

• China Margin Trades Buckle Leaving $364 Billion at Risk. The biggest tumble in Chinese shares since 2008 is proving especially painful for margin traders as their favorite stocks sink faster than the benchmark index, raising the risk of forced liquidations. The 30 equities in Shanghai with the highest levels of margin debt relative to tradable shares have dropped 17 percent on average since the market peaked on June 12, versus a 13 percent decline for the Shanghai Composite Index. Margin positions on the city’s bourse fell for the first time in a month on Friday, a sign that leveraged investors are unwinding bets after they grew more than five-fold in the past year. With at least $364 billion of borrowed money riding on stocks in Shanghai and Shenzhen, losses on those positions threaten to magnify market declines as traders sell shares to meet margin calls. 

• Greek Stocks Lead a Europe-Wide Rally. European stocks rose, with equities from France to Germany and Spain rallying the most since 2012, on optimism that a deal between Greece and its creditors is close, and as deals activity intensified. Greek banks jumped the most since May 2013. The Stoxx Europe 600 Index rallied 2.3 percent to 394.25 at the close of trading in London, with all its industry groups up. Greece’s ASE Index surged 9 percent, and a gauge tracking its banks soared 21 percent as Alpha Bank AE, National Bank of Greece SA and Piraeus Bank SA all jumped. Benchmark indexes of Germany, France and Spain climbed more than 3.8 percent.

• TCW Braces for Bond-Market Collapse by Piling the Cash Up High. TCW Group Inc. is taking the possibility of a bond-market selloff seriously. So seriously that the Los Angeles-based money manager, which oversees almost $140 billion of U.S. debt, has been accumulating more and more cash in its credit funds, with the proportion rising to the highest since the 2008 crisis. “We never realize what the tipping point is until after it happens,” said Jerry Cudzil, TCW Group’s head of U.S. credit trading. “We’re as defensive as we’ve been since pre-crisis.” TCW isn’t alone: Bond funds are holding about 8 percent of their assets as cash-like securities, the highest proportion since at least 1999, according to FTN Financial, citing Investment Company Institute data. Cudzil’s reasoning is that the Federal Reserve is moving toward its first interest-rate increase since 2006, and the end of record monetary stimulus will rattle the herds of investors who poured cash into risky debt to try and get some yield.

• California Climate Plan Has Inland Condemning Coastal Elitism. The way inland California lawmakers see it, the only benefit to their constituents from Governor Jerry Brown’s expansion of carbon pollution laws will be cleaner air to breathe as they wait at the unemployment office. “Families losing their jobs cannot afford solar panels on their homes when they can no longer afford their homes because they have no job,” state Senator Jeff Stone, a Republican from Riverside County, told colleagues during a debate on Senate Bill 350 this month. He called it “coastal elitism at the worst, an act that will cut jobs in Central Valley communities and benefit rich urban areas that already have more jobs and economic diversity.” Opponents such as Stone praise the goals of climate-change regulations but say private-sector innovation should drive clean technology, not government mandates. They warn that tightening California’s rules, already the nation’s toughest, will increase gas and electricity costs for companies, farmers and the poor, eliminating jobs and driving business to less-expensive states. Rural residents traveling long distances to work, school and medical care will be disproportionately hurt, they say. 

• U.S. Stock Strategists Haven't Been This Bullish Since 2011.

Wall Street Journal:

• Hedge Fund Citadel Prepares to Launch New Stock-Picking Unit. Hedge-fund Citadel LLC is preparing to roll out a new stand-alone stock-picking division, the latest sign of the Chicago firm’s postcrisis resurgence.

• Taliban Attack Afghan Parliament in Kabul. Police kill seven attackers; Assault leaves two dead and dozens of civilians wounded.

Fox News: 

• Controversial MIT economist Jonathan Gruber reportedly played key role in ObamaCare law. (video) MIT economist Jonathan Gruber, who claimed the authors of ObamaCare took advantage of what he called the "stupidity of the American voter," played a much bigger role in the law's drafting than previously acknowledged, according to a published report.

CNBC:

• Forget Greece—it's time to worry about China.

ZeroHedge: 

• Goldman's "Conspiracy Theory" Stunner: A Greek Default Is Precisely What The ECB Wants.

• Germany, Ireland Demand ELA Curbs If No Greek Capital Controls As Greek "Proposal" Revealed.

• Earnings Growth To Collapse Most Since 2009 In Q2. (graph) 

• Collapse, Part 1: Greece.

• Obama's "Single-Payer" Monopoly Looms As Healthcare Merger-Mania Heats Up.

• European Bonds, Stocks Explode Higher As "Optimism" Trade Gets Second Wind. (graph)

• Existing Home Sales Spike To Highest Since Nov 2009 As Prices Soar For Expensive Homes. (graph)

• For The First Time Ever, Total ECB Claims On Greek Banks Surpass Total Greek Deposits.

Business Insider:

• Under Armour(UA) hit the jackpot on its Jordan Spieth bet.

@DividendMaster:

• Steel prices in China continue plummeting. (graph)

Telegraph: 

• Greece deal in doubt as ministers discuss prospect of capital controls ahead of emergency EU summit. Finance ministers discuss prospect of capital controls on Greek banks as they write off a prospect for a deal tonight.

• Greece debt crisis: anti-austerity protesters rally in Athens. (video) As Greece and its creditors meet for eurozone crunch talks, thousands of Greeks are taking a defiant stand against austerity.