The S&P 500 mini-futures (ES) went right in the tank yesterday (Monday) driven to the lowest level since April by what may be the final stage of the Greek debt crisis. Greece will officially default on a payment to the IMF today, the Eurozone has cut off funding, and Greek banks are close to collapse.

The mini-futures gapped down 40 points at the Globex opening – the first chance traders had to cover or hedge positions – but clawed back almost to break-even by the opening of the day session. Then the bottom dropped out: the ES ended the day at 2050.50, below the yearly pivot point and 45.45 points below the previous close, on heavy volume. It was a miserable afternoon for the Bulls.

Today

That was the shocking first day of the Greek debacle; what happens next will be determined by what happens the rest of this week. If the market catches its breath and holds around this level it will slowly work its way back up over the course of the summer. But there is a good chance it will decline further, and precipitate the intermediate-term correction we have been waiting for.

For now, we are watching for a move above 2064, because it will give traders some hope that 2055-57 – the monthly breakdown point and today’s key line – will provide temporary support. 

But this is the end of the month, and if we close the month below 2064, the ES is likely to fall further. 2043-37 would be the first target area, followed by the unfilled gaps at 2030 and 2021-17.

We expect a brief consolidation move today; after that, the Bears want to see a follow-through to the downside to confirm that the intermediate term correction has started. If we don’t get that confirmation, the market can bounce quickly from the 200-day moving average line, or from the red uptrend line on the chart.

Major support levels for Tuesday: 2043-30, 2017-21, 2006-03, 1980-75;
major resistance levels: 2085-86, 2093.75-95.50, 2105-06, 2112.50-14.50

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Chart: S&P500 mini-futures (ESU5), June 29, 2015