Bear Radar

Style Underperformer:

• Mid-Cap Value -.57%

Sector Underperformers:

• 1) Oil Tankers -3.14% 2) Social Media -3.06% 3) Alt Energy -2.91%

Stocks Falling on Unusual Volume:

• AET, ES, HNT, SC, EDU, CRH, CFR, XRS, SOXX, WX, DL, CNC, BONA, RPTP, MR, DQ, NTES, WB, FMS, CMGE, TEF, NP, CCIH, CAF, BUD, GCI, RPTP, CLR and VSLR

Stocks With Unusual Put Option Activity:

• 1) SCHW 2) EWG 3) EWA 4) AXP 5) XOP
  

Stocks With Most Negative News Mentions:

• 1) VMW 2) ISRG 3) STX 4) GM 5) PBR
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Growth -.21%

Sector Outperformers:

• 1) Gold & Silver +1.14% 2) Gaming +.52% 3) Hospitals +.51%
  

Stocks Rising on Unusual Volume:

• VSAR

Stocks With Unusual Call Option Activity:

• 1) ODP 2) AET 3) IP 4) AXLL 5) WLL
  

Stocks With Most Positive News Mentions:

• 1) UAL 2) MDCO 3) EW 4) HUM 5) ABX
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Morning Market Internals

NYSE Composite Index:

• Volume Running 2.0% Above 100-day average
• 2 Sectors Rising, 8 Sectors Declining
• 35.5% of Issues Advancing, 61.7% Declining
• 24 New 52-Week Highs, 181 New Lows
• 44.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 38.7
• Vix 16.9
• Total Put/Call .93
• TRIN/Arms 1.56

Monday Watch

Today's Headlines 

Bloomberg: 

• Tsipras Triumphs as Greece Votes Against Austerity. (video) Greece voted against yielding to further austerity demanded by creditors, leaving Europe’s leaders to determine if the renegade nation can remain in the euro. Sixty-one percent of voters backed Prime Minister Alexis Tsipras’s rejection of further spending cuts and tax increases in an unprecedented referendum that’s also taken the country to the brink of financial collapse. Tsipras described the result as a “great victory”, and said Athens would return to the negotiating table on Monday with a strengthened hand.

• Greek Party May End in Euro-sized Hangover. Greeks delivered a clear message to the rest of Europe, and then many partied into the night. As banks remain shut and European leaders prepare to respond to their vote against more austerity, the morning hangover also brings the harsh reality: the country may end up going down fighting, clinging to the euro while refusing the conditions attached to keeping it. Even as economists and European officials warned that the country would move closer to severing ties with the euro area, Greeks celebrated what they see as a better future. Prime Minister Alexis Tsipras, who called for a “no” vote in Sunday’s referendum, said he will restart talks with creditors immediately and use the victory as a bargaining chip. Nikos Panos, 55, a “no” voter in Athens, said the 61-to-39 percent result would give Greece a stronger bargaining position. “The government can go to Brussels on Monday and say we have a mandate,” he said.

• Trillion-Dollar Stock Managers See Chaos on Greek ‘No’ Vote. It shouldn’t have gotten this far. That’s the view of equity managers overseeing more than $3.7 trillion, who say the game of chicken between Greek Prime Minister Alexis Tsipras and creditors threatens lasting damage to a European stock rally that earlier in 2015 added as much as $2.17 trillion to share prices. “The market right now hasn’t priced in a potential ‘no’ vote,” said David Joy, the Boston-based chief market strategist at Ameriprise Financial Inc., which oversees $815 billion. “If we get one, we’re going to see another round of downside volatility in excess of what we saw on Monday. The move would be more violent.”

• JPMorgan to Barclays See Greek Euro Exit Likeliest Scenario. Economists from JPMorgan Chase & Co. to Barclays Plc made a Greek departure from Europe’s monetary union their base scenario after the country’s electorate rejected the austerity needed to secure international assistance. “Although the situation is fluid, at this point Greek exit from the euro appears more likely than not,” Malcolm Barr, an economist at JPMorgan in London, said in a report to clients on Sunday, adding it could come “under chaotic circumstances.” “Exit now is the most likely scenario,” Barclays analysts said in a separate report. “Agreeing on a program with the current Greek government will be extremely difficult for euro-area leaders, given the Greek rejection of the last deal offered, and will be a difficult sell at home.” 

• 10 Consequences of Greece's 'No' by Mohamed A. El-Erian. The implications will be felt primarily in Greece, but also in Europe and beyond. Here are 10 consequences of the vote that could unfold in the next few days:

• China Brokers Dust Off Wall Street’s Playbook From Crash of 1929. (graph) On Wall Street in 1929, it was the great banking houses of J.P. Morgan and Guaranty Trust Company. In China today, it’s names like Citic Securities Co. and Guotai Junan Securities Co. They’re separated by 86 years and 7,300 miles, but Chinese financiers are turning to the same playbook used by their American counterparts to fight a crash that’s wiping out stock-market fortunes on an unprecedented scale. Investors in China are hoping it works out a lot better this time around.

• China Stock Plunge Leaves Market More Leveraged Than Ever Before. (graph) Leveraged bets on Chinese stocks have increased to a record versus the size of the market as prices fall faster than margin traders cut positions. The outstanding balance of margin loans on the Shanghai and Shenzhen bourses climbed to 4.4 percent of overall market capitalization on July 2 from 3.6 percent on June 12, before the rout began, as the attached chart shows. The data doesn’t include unregulated borrowing, which Bocom International Holdings Co. estimates at around $322 billion. That would increase the debt to market cap ratio to more than 9 percent. Higher leverage may undermine government measures to stem the steepest three-week rout in the nation’s equities in a quarter-century. Margin traders reduced positions for nine days through Thursday, the longest stretch of declines on record, even as the central bank cut interest rates and the securities regulator eased margin-trading rules. 

• China Blames Rout on Short Sellers Who Bought as Stocks Tumbled. Rumor-spreading short sellers and foreign investors with a hidden agenda. If you believe China’s state-run media, those are some of the key culprits for a stock-market rout that erased $3.2 trillion of value in three weeks -- or almost $1 million for each minute of trading on mainland exchanges. The underlying message, that market manipulation is fueling the selloff, was reinforced by securities regulators last week as they pledged to crack down on “vicious” short selling. The problem with that narrative, though, is that the numbers tell a different story. Short positions on the Shanghai Stock Exchange totaled just 1.95 billion yuan ($314 million) on Thursday, or less than 0.03 percent of the country’s market capitalization, as bears closed out more than half their bets since June 12. Foreign money managers own fewer than 3 percent of Chinese shares, and they’ve been adding to holdings in Shanghai as prices tumble. The more likely reason for the rout, according to analysts in and outside China, is simply that the nation’s longest-ever bull market pushed valuations to unsustainable levels. Local investors, who borrowed record amounts of money to amplify their bets, lost faith that share prices would keep rising and now they’re heading for the exits. 

• Corker Warns Kerry Against Rush to Finish Nuclear Deal With Iran. The U.S. shouldn’t rush to finish a nuclear deal with Iran simply to meet a deadline that would allow a shorter congressional review period, said Senator Bob Corker, chairman of a committee that will be pivotal in deciding an agreement’s fate in Congress. Six world powers and Iran have been in talks since late June, attempting to complete a deal that would ease economic sanctions while allowing Iran to pursue limited nuclear activities with intrusive international monitoring. 

• Treasuries Surge With Aussie Bonds as Greece Spurs Safety Bid. Treasuries and Australian bonds surged after Greek voters opted against spending cuts being demanded by creditors, increasing concern the nation will lose access to new loans and be forced to leave the euro currency bloc. Japanese bonds rose for a second day. German 10-year yields may drop to 0.65 percent or less when bunds open Monday, after closing at 0.79 percent Friday, said JPMorgan Chase & Co. The turmoil may reduce the prospects for a Federal Reserve interest-rate increase in September, according to BNP Paribas SA.

• Aussie Below 75 Cents First Time Since 2009 Amid Greek Turmoil. The Aussie dollar dropped below 75 U.S. cents to a six-year low as the heightened risk of a Greek exit from the euro added to slumping commodity prices in spurring traders to sell the South Pacific nation’s assets. Australia’s currency was already sliding as iron ore, the country’s biggest export earner, tumbled amid a glut in supply and concern that demand will shrink as China’s economy slows. 

• Emerging Currencies Drop, Led by Forint, After Greece ‘No’ Vote. The Hungarian forint and the Romanian leu led emerging-market currencies lower as Greece’s rejection of austerity measures heightened the chance the nation will exit the euro, damping demand for riskier assets. A Bloomberg gauge of developing-nation exchange rates dropped 0.4 percent as of 9:48 a.m. in Singapore, set for its lowest close since March 19.

• Asian Bond Risk Jumps as Greek No Vote Seen Sparking Volatility. Greek voters’ rejection of austerity sent ripples through Asian credit markets as bond risk surged to a six-month high. The Markit iTraxx Asia index of credit-default swap prices leapt 6 basis points to 117 basis points, prices from Westpac Banking Corp. show. That leaves it set for its biggest daily jump since March and highest close since January, according to data provider CMA.

• Most Chinese Stocks Decline as Large-Caps Gain, ChiNext Tumbles. Most Chinese shares fell, led by technology shares, as government measures to shore up equities failed to drive a rebound outside the nation’s largest companies. About three stocks dropped for each that rose on the Shanghai Composite Index, which was 2.2 percent higher at 3,766.37 at the mid-morning break after a 7.8 percent surge at the open. The benchmark gauge was supported by more than 8 percent rallies in PetroChina Co. and Industrial & Commercial Bank of China Ltd., the two largest members on the gauge. The ChiNext index of smaller companies sank 4 percent, while the Shenzhen Composite Index tumbled 2.6 percent. Mainland shares surged at the start of trading after authorities suspended initial public offerings, brokerages pledged to buy shares and the central bank said it would provide liquidity for margin trading. Central Huijin Investment Ltd., a unit of China’s sovereign wealth fund, said it was buying exchange-traded funds on the secondary market.

• Asian Stocks Slide as Greece ‘No’ Vote Raises Risk of Euro Exit. Asian stocks fell, with the regional benchmark index heading for an almost four-month low, as Greece voted against accepting further austerity. Chinese shares rallied after posting their biggest three-week slump since 1992. Asahi Glass Co., which gets about 21 percent of sales from Europe, dropped 2.2 percent in Tokyo. BHP Billiton Ltd., the world’s biggest mining company, slipped 2.3 percent as copper futures headed for a second day of decline in London. China Airlines Ltd. gained 2.6 percent in Taipei after regulator increases flights to mainland China. The MSCI Asia Pacific Index slid 1.1 percent to 144.78 as of 10:18 a.m. in Hong Kong, heading for the lowest close since March 16.

• Brent Falls Below $60 as Investors Eschew Risky Assets on Greece. Brent crude dropped below $60 a barrel for the first time since April after Greece voted against austerity, increasing the risk of its exit from the euro area. Futures slid as much as 1.6 percent in London, falling for a second day.  

• Iron Stockpiles to Rise Further, Hurting Prices, JPMorgan Says. Iron ore reserves at China’s ports may have hit an inflection point -- and that could be bad for prices. Holdings climbed 2.8 percent last week to 81.55 million metric tons, rebounding from the lowest level since 2013 to post the first increase since April, according to Shanghai Steelhome Information Technology Co. The stockpiles fell in the three months to June, supporting a rally. “Inventories should start to pick up again and will increase,” Daniel Kang, an analyst at JPMorgan Chase & Co. in Hong Kong, said by phone on Monday, citing increased exports. “That should in turn put some pressure on iron ore.”

• Shipping Industry Gloomiest Since 2009 in Survey as Glut Endures. The shipping industry is the most pessimistic in six years about its prospects as a fleet surplus persists, according to a survey by law firm Norton Rose Fulbright. Two thirds of respondents working in the industry said they were pessimistic about its prospects, the most negative outlook since 2009, the London-based company said in a statement. The biggest contributor to their negative view was excess fleet capacity.

Wall Street Journal: 

• Greek Referendum — Live.

• Regulators Probe Marketing of Hot Private Tech Shares. Trading of such shares has boomed in recent months. Securities regulators have launched a broad investigation into whether hedge funds and other investors are improperly selling hot private technology stocks amid a boom in the trading of such shares, people close to the probe say. The regulatory scrutiny, which is at an early stage, follows a March page-one article in The Wall Street Journal that delved into the role of middlemen in the burgeoning market for private shares. The investigation, by the Securities and Exchange Commission, is focused on a burst of new activity recently by people selling pre-IPO shares as valuations of private tech companies have exploded and companies have opted to remain private for longer.

• How the Affordable Care Act Is Reducing Competition. Five big insurers seem set to become three, as Aetna buys Humana and Anthem eyes Cigna. Thanks, ObamaCare. The urge to merge is sweeping managed health care. Aetna announced Friday a $37 billion deal to acquire Humana. Anthem and Cigna are in merger talks and could be next. The national for-profit insurers are on an anxious mission to consolidate. These combinations will sharply reduce competition and consumer choice, as five big insurers shrink, probably, to three. This trend is a direct consequence of ObamaCare, reflecting the naïveté of its architects

CNBC:

• Greece: After the big No, what next?

Zero Hedge:

• Greece Contemplates Nuclear Options: May Print Euros, Launch Parallel Currency, Nationalize Banks.

• Greeks Flood Syntagma Square To Celebrate "No" Vote. (video)

• Volatility, Confusion Reign As PBoC Intervenes: Chinese Stocks Surge Then Tumble. (graph)  

• More Sellside Reactions To The Greek Referendum.

• The "Nightmare Of The Euro-Architects" Is Coming True: JPM Now Sees Grexit, Eurogroup "Split In Coming Days".

• IOUs It Is: Why Greece May Have A Problem Printing "Rogue" Euro Banknotes.

• Marine Le Pen, Anti Euro French Presidential Frontrunner, Applauds Greek Victory Over "EU Oligarchy".

• China "Crosses Rubicon" With Stock Bailout; BofA Says PBoC Risks "Hurting Its Credibility".

• Panic: China Central Bank Steps In To Bailout Stocks. (graph)

• They Want To Use "Hate Speech Laws" To Destroy Freedom Of Speech In America.

• Did They "Fix" The US Economy? (video)

• The Central Bankers Dilemma: The Pendulum’s Back Swing.

Business Insider:

• China is taking extraordinary steps to ensure its reign over the South China Sea.

• We just got the clearest sign yet that Greece could be kicked out of Europe if it votes 'No'.

• Britain's banks aren't as protected from Greece as you may think.

• Europe's very core is being threatened.

• Netanyahu unloads: The Iran deal is worse than North Korea.

• China's stock market faces a make-or-break week.

• The NSA can still do something the US government said was illegal.

• The Trans-Pacific Partnership is bad news for the American labor market.

• The US wins the Women's World Cup after dismantling Japan with 4 goals in 15 minutes.

• Another government funding showdown looms as Congress heads back work.

Reuters:

• Saudi Aramco lowers August Arab Light crude OSP to Asia. Saudi Arabia has cut the official selling price (OSP) for its benchmark Arab Light crude to Asia in August, as expected, while raising the price to European customers. State oil company Aramco has lowered the August price for its Arab Light grade for Asian customers by 10 cents a barrel versus July, setting it at minus $0.10 to the Oman/Dubai average, it said on Sunday.

Daily Caller:

• George Will: Trump A ‘One-Man Todd Akin’ For GOP, Acting Like A ‘Democratic Mole'.

Telegraph:

• Greek referendum results live: 'No' vote to Europe's bail-out terms as Greeks choose to deal. Greeks choose to give the 'Big No' to their bail-out by a 60pc majority putting the country on a collision course with the eurozone. 

• Europe thrown into crisis as Greece nears euro exit after shock referendum result. The European Union is facing its worst crisis since the formation of the euro after Greece voted decisively against the terms of a eurozone bailout deal. 

• Defiant Greeks reject EU demands as Syriza readies IOU currency. Europe suffers biggest bloody nose since failed French and Dutch referenda a decade ago in Greek landslide revolt.

People's Daily:

• China Deflation Risk Is Mounting, Ex-PBOC Adviser Says. China faces a mounting risk of a deflationary spiral, which would be the country's "worst nightmare" amid slowing economic growth and heavy corporate debt, Yu Yongding, a former adviser to the People's Bank of China, writes in a commentary. Downward pressure on prices from overcapacity in industry may push the nation into a "vicious spiral of debt deflation," Yu writes. Long-term elimination of overcapacity requires structural adjustments to improve the allocation of resources that would be "painful and slow," Yu writes.

Caijing:

• China's National Pension Fund Orders Halt to Stock Sales. National Council for Social Security Fund orders fund management cos. to stop selling stocks from portfolios, citing people familiar with the matter.

Night Trading

• Asian indices are -1.75% to -.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 117.0 +7.0 basis points.

• Asia Pacific Sovereign CDS Index 59.25 +.75 basis point.

• S&P 500 futures -1.16%.

• NASDAQ 100 futures -1.24%.

Morning Preview Links

Earnings of Note

Company/Estimate 

• (SHLM)/.77

Economic Releases

9:45 am EST

• Final US Services PMI for June is estimated to rise to 54.9 versus a prior estimate of 54.8.

10:00 am EST

• Labor Market Conditions Index for June is estimated to rise to 2.0 versus 1.3 in May.

• The ISM Non-Manufacturing Composite for June is estimated to rise to 56.4 versus 55.7 in May.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Japan Leading Indicators report could also impact trading today.

BOTTOM LINE: Asian indices are sharply lower, weighed down by technology and financial shares in the region. I expect US stocks to open lower and to maintain losses into the afternoon. The Portfolio is 25% net long heading into the week.

Weekly Outlook

Week Ahead by Bloomberg. 

Wall St. Week Ahead by Reuters.

Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly lower on Greek debt deal concerns, Fed rate hike worries, global growth fears, European/Emerging Markets/US High-Yield debt angst, China bubble-bursting worries and technical selling. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 25% net long heading into the week.

Today's Headlines

Bloomberg:  

• Greeks Head to Polls Divided for Referendum to Chart New Course. Greeks are heading to the polls Sunday, evenly split on a referendum to chart a new course in their five-year economic crisis. “Come Monday, Greece won’t be facing just massive economic problems; it will be a deeply divided country,” said Nikos Marantzidis, a pollster and professor of political science at the University of Macedonia in northern Greece. “If the economic situation deteriorates further, which it probably will, the divide will only run deeper.” A poll commissioned by Bloomberg showed 43 percent of voters intend to reject the creditor proposals, while 42.5 percent will accept the conditions. The survey of 1,042 people conducted by the University of Macedonia had a margin of error of 3 percentage points. 

• Greeks Vote on Place in Euro as Banks Run Dry: The Process. This is a guide to the rules governing the voting.

• ECB Primes European Tranquilizer as Greece Faces Bank Chaos. The European Central Bank claims it can calm any regional market turmoil that follows Greece’s referendum on Sunday. Saving the country’s banking system will be harder. With two asset-buying programs, international swap lines, backstops for eastern Europe and cash tenders in place, the ECB has a wide range of tools at hand should bond yields surge or money markets freeze after the July 5 vote. That’s a possible outcome if voters reject the terms of a European Union-led bailout. Yet even if the Greek people back the EU offer, the nation’s lenders, which have been shut and under capital controls for the past week, won’t be able to reopen soon unless the ECB approves more liquidity. To do that, monetary-policy officials would have to take a leap of faith that the government will be able to strike a new deal.

• China Freezes IPOs, Greek Vote Too Close to Call: Saturday Wrap. Here are highlights of news that broke around the world on the U.S. Independence Day holiday:

Wall Street Journal:

• Iran Nuclear Talks Appear to Advance. But senior diplomats stress elusive deal to end 10-year standoff is far from certain. Key elements of a nuclear agreement between Iran and world powers appeared to be falling into place on Saturday, just ahead of a July 7 deadline, according to officials involved in negotiations in Austria’s capital. Still, senior American and Iranian diplomats stressed an elusive deal to end a 10-year standoff over Iran’s nuclear program was far from certain.

• Greek, German Tensions Turn to Open Resentment as Referendum Looms. Anti-German rhetoric from some Greek politicians is met by mounting frustration in Berlin. At newspaper kiosks in Greece, ahead of Sunday’s referendum, some front pages this week showed swastikas and the word “OXI”, Greek for “no.” On the streets of Athens, a poster showed German Finance Minister Wolfgang Schäuble with the words: “He’s been sucking your blood for five years. Now tell him NO.” In Germany, Greece’s most powerful creditor, the press have this week poured their own contempt and ridicule on Greek Prime Minister Alexis Tsipras, with epithets ranging

ZeroHedge:

• The Greek Bluff In All Its Glory: Presenting The Grexit "Falling Dominoes". (graph)

• China Scrambles to Put Plunge Protection Team Together: Banks Pledge Support For Crashing Market. (graph)

• This Is Why The Euro Is Finished. (graph)

• Sugar Daddies Are Paying Their Share Of The $1.3 Trillion Student Loan Balance. (graph)

• FBI Admits 11 Attacks Against Internet, Power Grid Lines In California This Year.

• Greeks Turn To Bitcoin To Dodge Capital Controls.

• Nomi Prins: In A World Of Artificial Liquidity – Cash Is King.

Business Insider:

• China's new Silk Road is a disaster waiting to happen.

• 'Inhuman and barbaric' Boko Haram militants have unleashed a new wave of terror in Nigeria.

• Britain's government is planning to raid wealthy people's pension pots.

• Tunisia declares state of emergency after hotel attack on foreign tourists.

• Here are the markets most exposed to the crisis in Greece.

• Varoufakis accuses Greece's creditors of 'terrorism'.

• These Chinese companies pledged to buy at least $19.3 billion in shares to stabilise the cratering market.

• The World Bank deleted a section of a report that slammed the Chinese government. 

• GOLDMAN: Here are the 3 main scenarios for Greece after its referendum.

Telegraph:

• The week that Germany turned its back on Greece. After trust between the two broke at a key moment, the Telegraph travels to Frankfurt and Berlin to ask those in the know what will – or should – happen next. 

• US unprepared for coming crash with interest rates still stuck to the floor. The inability of the US central bank to raise interest rates since the crisis leaves it vulnerable when the next recession strikes.

Bild:

• Schaeuble Says Tsipras Doesn't Want Reform Program. Greek govt doesn't want reform program given economic data, statements by Alexis Tsipras before and after election, German Finance Minister Wolfgang Schaeuble says in interview.

Caijing:

• China Suspends New IPOs. Suspension was decided by a State. Suspension was decided by a State Council meeting and executed by the China Securities Regulatory Commission.