Continued weakness and uncertainty

As an intraday trader, I continue to see underlying weakness from the current tape action. Friday's trading session was no exception as the pre-market rally and gap up in the futures was met by strong selling early in the morning followed by a bounce and then another sell off into the close to finish right near the lows. Overall cumulative ticks finished at -20,000.

Early on in today's globex session and the futures are already trading below Friday's lows which typically is not very positive   if we manage to open around these levels when cash opens today. The Euro as seen by the /6E is now very close to breaking it's swing lows at 1.40 level which could attract further selling. As you would expect the dollar is up, bonds are up and other risk assets are coming off so the risk off trade is in full swing right now. I see last weeks swing lows as important levels to hold (SPX 1318 and ES 1316) and I think the market will probably want to test this level early in Monday's session if we open with a large gap down. It will possibly offer a good trading opportunity with a tight stop and a trade offering a good risk to reward ratio (ie 1:2 or 1:3). I expect paper sellers off the open on Monday given the current price action.

The signs aren't great from an market auction theory point of view. The more we auction at these price levels the more the market is accepting value here. Which if we were in a up trending market means that something significant has changed. I think the longer the Greece thing drags on and the uncertainty surrounding that, the more impact it will begin to have on market participants and thus leading to a self fulfilling prophecy of lower prices (if it hasn't happened already).