Market Recon Wednesday

Good Morning,

                     Where do want to start?  China (Ugleeeeee !!!!), or Greece, where I’m not sure ugly is the appropriate word.  Actually, I’m not sure what an appropriate word might be.  Let’s start in China.  Last night (NY time), HSBC, and the government released their twin Manufacturing PMI numbers for China, and you guessed it….they both missed consensus.  That may have been the catalyst, or maybe it’s just that the whole deleveraging process still has a few miles to run, but Chinese stocks gave up their gains from that oddball session on Tuesday, closing down 5%.  Folks, I wouldn’t trade Chinese equities with your money right now.  Losing my shirt scares me more than making a fortune delights me.
                     Greece, now in default, has apparently made overtures toward their lenders this morning.  That’s why European equity markets are in party mode as I type out this note.  You have probably noticed the pop in US futures markets.  I don’t know how much faith you can put in anything right now.  Is this sincere?  Will there be a referendum at all?  Will the people of Greece throw a group tantrum?  Instead of judging, put yourself in their shoes.  Your life has drastically changed for the worse over the last few years.  It’s still changing for the worse.  You have money in the bank, but you are not allowed to access it.  You feel betrayed by your leaders.  You feel betrayed by your creditors.  Never mind whether or not these statement are backed by fact or not.  The recipe is there for both chaos, and a humanitarian disaster.  Those things will cost Europe more in the end, than allowing Tsipras to somehow save face.  I do not know how this plays out, and neither do “the experts”.

                      Macro ??  Gang, I hate to distract you form all of the headline making that we see around our planet this morning, but we have a fairly large batch of macro on our plates today…and then there’s “Jobs Day” tomorrow.  First lets’ get rid of today’s items that in the end, won’t impact your trading session.  The Challenger Job Cut Report will not sway the markets, and will not sway you, unless you’re an unfortunate target.  Motor Vehicle Sales do matter, but the numbers are released sporadically, and will push or pull specific stocks.  There will not be a “Whoa Baby” moment there.  What will immediately impact the futures market will be the June ADP Employment Report.  That number will be released at 08:15 ET and will be forgotten 24 hours and 15 minutes later.  The consensus for today is for 218K, up fro  last month’s 201K.  The range is broad, basically 200K to 250K.
                       You’ll get hit with a double dose of manufacturing data next.  At 09:45 ET Markit will print their PMI number……and nobody will notice (except me), and at 10am ET, we’ll see the ISM print.  That one counts.  The expectation (hope) for this June number is for a 53.2 tag, up from May’s 52.8.  The 10am hour will also bring us May Construction Spending.  Lastly, but certainly not least importantly, we’ll get our weekly Oil Inventories report at 10:30 ET.  we are going for our ninth consecutive contraction in Oil supply this week.
                       No doubt, we’ve got a ton of moving parts impacting what we do right now.  No harm stepping back when you need to, in order to gather your thoughts.  Slow things down when you need to, and play small ball.  Singles hitters still make the all-star team.
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Sarge’s TRADING LEVELS
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SPX: 2107, 2099, 2090, 2080, 2074, 2068, 2057, 2052

RUT: 1283, 1278, 1272, 1265, 1259, 1253, 1248, 1243