The headlines this morning blare that an "Agreekment" has been reached between the Eurozone and Greece. After a marathon day-night-day negotiating session over the weekend, it appears that a "Grexit" was avoided in the wee hours this morning. And while one's initial reaction might be that it is time for the markets to celebrate, the details of the "deal" suggest that it might be best to curb that enthusiasm a bit.

You see, the "Agreekment" is not really a final deal in and of itself. No, there is merely an agreement to begin the negotiating process a third bailout for Greece. In reality, Alexis Tsipras must implement a list of economic reforms by Wednesday as a precondition to what is being called "a possible start to formal negotiations."

Oh, it is also worth noting that (a) the terms of the this deal are actually much tougher than the one the citizens of Greece voted to thumb their noses at last weekend, (b) the negotiations won't start until Greece actually passes the new austerity and reform measures, and (c) the deal has to be passed by the Greek parliament and various Eurozone member states. As such, anyone thinking that Greece is now "fixed" and that the latest drama is over may need to think again.

For example, Eurogroup head Dijsselbloem said he hoped that a formal mandate to begin bailout negotiations will be agreed to by the end of the week. Note that there is still some time pressure here as Greece still needs €7 billion in financing by July 20th and an additional €5 billion by mid-August to meet near-term debt obligations.

Then there is the issue of the official approvals of this "Agreekment"... And given the recent emotional public vote by the Greek citizens, this could easily become problematic.

Currently, the Greek parliament is supposed to vote on the deal by Wednesday. However, reports indicate that hardline Syriza officials and opposition party members have already criticized the details of the deal due to austerity measures imposed. In addition, Greece's Labor Minister said the terms of the deal were not viable and could lead to new elections this year.

The public doesn't appear to be overjoyed either. Reports indicate that the media reacted with fury to the latest European demands for spending cuts and tax hikes. A Bloomberg article noted that Syriza spokesman Nikos Filis said Greece is being "waterboarded" by Eurozone leaders and accused Germany of "tearing Europe apart."

With the public furor comes the possibility that Greece's Parliament won't agree to the new demands. There is even talk that Tsipras may need to agree to snap elections in order to get this deal passed.

As for the Greek demands that their debt burden be reduced, the answer was basically, "not so much." However, in a concession to Greece, Eurozone leaders have agreed to discuss ways to make the country's debt load more manageable - at a later date.

The WSJ reports that German Chancellor Merkel said such measures could include more time to repay loans, but won't include writedowns of current debt. And Merkel added that discussions around debt sustainability will only begin after the first review of the bailout program.

Finally, with the ECB leaving the level of emergency loan assistance to Greek banks unchanged again today, the banks will remain closed and the capital controls will remain intact. Again, the key is that nothing is going to happen until the Greeks pass the reform measures demanded by the Eurozone.

The bottom line is that while the "Agreekment" may be done, there are many hoops that Greece must jump through and any number of stumbling blocks that could derail the process along the way. And what happens if Greece doesn't agree to the new terms (which, again, are much tougher than the ones on the table before the Greek referendum), you ask? In short, Germany's proposal is for Greece to take a 5-year "timeout" from the Eurozone.

As for the U.S. stock market, it appears that the "Agreekment" has put traders are in an upbeat mood to start the week. However, as the chart shows, unless the projected rally becomes intense, not much is likely to change on a chart basis.

S&P 500 Index - Daily

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This Morning's Pre-Game Indicators

Here are the Pre-Market indicators we review each morning before the opening bell...

Major Foreign Markets:
Japan: +1.57%
Hong Kong: +1.30%
Shanghai: +2.38%
London: +0.82%
Germany: +1.38%
France: +1.96%
Italy: +1.42%
Spain: +1.49%

Crude Oil Futures: -$0.59 to $52.18

Gold: -$2.90 at $1155.00

Dollar: lower against the yen, higher vs. euro and pound

10-Year Bond Yield: Currently trading at 2.439%

Stock Indices in U.S. (relative to fair value):
S&P 500: +13.10
Dow Jones Industrial Average: +123
NASDAQ Composite: +32.50

Thought For The Day:

The real voyage of discovery consists not in seeking new lands but seeing with new eyes. - Marcel Proust

Current Market Drivers

We strive to identify the driving forces behind the market action on a daily basis. The thinking is that if we can both identify and understand why stocks are doing what they are doing on a short-term basis; we are not likely to be surprised/blind-sided by a big move. Listed below are what we believe to be the driving forces of the current market (Listed in order of importance).

1. The State of the Greek Crisis
2. The State of China's Stock Market
3. The State of Fed/ECB/PBoC Policy
4. The State of the U.S. Economy

The State of the Trend

We believe it is important to analyze the market using multiple time-frames. We define short-term as 3 days to 3 weeks, intermediate-term as 3 weeks to 3 months, and long-term as 3 months or more. Below are our current ratings of the three primary trends:

Short-Term Trend: Moderately Negative
(Chart below is S&P 500 daily over past 1 month)

Intermediate-Term Trend: Moderately Negative
(Chart below is S&P 500 daily over past 6 months)

Long-Term Trend: Moderately Positive
(Chart below is S&P 500 daily over past 2 years)

Key Technical Areas:

Traders as well as computerized algorithms are generally keenly aware of the important technical levels on the charts from a short-term basis. Below are the levels we deem important to watch today:

• Key Near-Term Support Zone(s) for S&P 500: 2040
• Key Near-Term Resistance Zone(s): 2080-2100

The State of the Tape

Momentum indicators are designed to tell us about the technical health of a trend - I.E. if there is any "oomph" behind the move. Below are a handful of our favorite indicators relating to the market's "mo"...

• Trend and Breadth Confirmation Indicator (Short-Term): Negative
• Price Thrust Indicator: Negative
• Volume Thrust Indicator: Negative
• Breadth Thrust Indicator: Negative
• Intermediate-Term Bull/Bear Volume Relationship: Neutral
• Technical Health of 100+ Industry Groups: Moderately Positive

The Early Warning Indicators

Markets travel in cycles. Thus we must constantly be on the lookout for changes in the direction of the trend. Looking at market sentiment and the overbought/sold conditions can provide "early warning signs" that a trend change may be near.

• S&P 500 Overbought/Oversold Conditions:
  - Short-Term: Oversold
  - Intermediate-Term: Very Oversold
  
• Market Sentiment: Our primary sentiment model is Positive .

The State of the Market Environment

One of the keys to long-term success in the stock market is stay in tune with the market's "big picture" environment in terms of risk versus reward.

• Weekly Market Environment Model Reading: Neutral

Wishing you green screens and all the best for a great day,

David D. Moenning
Founder and Chief Investment Strategist
Heritage Capital Research

Indicator Explanations

Trend and Breadth Confirmation Indicator (Short-Term) Explained: History shows the most reliable market moves tend to occur when the breadth indices are in gear with the major market averages. When the breadth measures diverge, investors should take note that a trend reversal may be at hand. This indicator incorporates an All-Cap Dollar Weighted Equity Series and A/D Line. From 1998, when the A/D line is above its 5-day smoothing and the All-Cap Equal Weighted Equity Series is above its 25-day smoothing, the equity index has gained at a rate of +32.5% per year. When one of the indicators is above its smoothing, the equity index has gained at a rate of +13.3% per year. And when both are below, the equity index has lost +23.6% per year.

Price Thrust Indicator Explained: This indicator measures the 3-day rate of change of the Value Line Composite relative to the standard deviation of the 30-day average. When the Value Line's 3-day rate of change have moved above 0.5 standard deviation of the 30-day average ROC, a "thrust" occurs and since 2000, the Value Line Composite has gained ground at a rate of +20.6% per year. When the indicator is below 0.5 standard deviation of the 30-day, the Value Line has lost ground at a rate of -10.0% per year. And when neutral, the Value Line has gained at a rate of +5.9% per year.

Volume Thrust Indicator Explained: This indicator uses NASDAQ volume data to indicate bullish and bearish conditions for the NASDAQ Composite Index. The indicator plots the ratio of the 10-day total of NASDAQ daily advancing volume (i.e., the total volume traded in stocks which rose in price each day) to the 10-day total of daily declining volume (volume traded in stocks which fell each day). This ratio indicates when advancing stocks are attracting the majority of the volume (readings above 1.0) and when declining stocks are seeing the heaviest trading (readings below 1.0). This indicator thus supports the case that a rising market supported by heavier volume in the advancing issues tends to be the most bullish condition, while a declining market with downside volume dominating confirms bearish conditions. When in a positive mode, the NASDAQ Composite has gained at a rate of +38.3% per year, When neutral, the NASDAQ has gained at a rate of +13.3% per year. And when negative, the NASDAQ has lost at a rate of -8.5% per year.

Breadth Thrust Indicator Explained: This indicator uses the number of NASDAQ-listed stocks advancing and declining to indicate bullish or bearish breadth conditions for the NASDAQ Composite. The indicator plots the ratio of the 10-day total of the number of stocks rising on the NASDAQ each day to the 10-day total of the number of stocks declining each day. Using 10-day totals smooths the random daily fluctuations and gives indications on an intermediate-term basis. As expected, the NASDAQ Composite performs much better when the 10-day A/D ratio is high (strong breadth) and worse when the indicator is in its lower mode (weak breadth). The most bullish conditions for the NASDAQ when the 10-day A/D indicator is not only high, but has recently posted an extreme high reading and thus indicated a thrust of upside momentum. Bearish conditions are confirmed when the indicator is low and has recently signaled a downside breadth thrust. In positive mode, the NASDAQ has gained at a rate of +22.1% per year since 1981. In a neutral mode, the NASDAQ has gained at a rate of +14.5% per year. And when in a negative mode, the NASDAQ has lost at a rate of -6.4% per year.

Bull/Bear Volume Relationship Explained: This indicator plots both "supply" and "demand" volume lines. When the Demand Volume line is above the Supply Volume line, the indicator is bullish. From 1981, the stock market has gained at an average annual rate of +11.7% per year when in a bullish mode. When the Demand Volume line is below the Supply Volume line, the indicator is bearish. When the indicator has been bearish, the market has lost ground at a rate of -6.1% per year.

Technical Health of 100 Industry Groups Explained: Designed to provide a reading on the technical health of the overall market, this indicator takes the technical temperature of more than 100 industry sectors each week. Looking back to early 1980, when the model is rated as "positive," the S&P has averaged returns in excess of 23% per year. When the model carries a "neutral" reading, the S&P has returned over 11% per year. But when the model is rated "negative," stocks fall by more than -13% a year on average.

Weekly State of the Market Model Reading Explained:Different market environments require different investing strategies. To help us identify the current environment, we look to our longer-term State of the Market Model. This model is designed to tell us when risk factors are high, low, or uncertain. In short, this longer-term oriented, weekly model tells us whether the odds favor the bulls, bears, or neither team.

Disclosures

The opinions and forecasts expressed herein are those of Mr. David Moenning and may not actually come to pass. Mr. Moenning's opinions and viewpoints regarding the future of the markets should not be construed as recommendations. The analysis and information in this report is for informational purposes only. No part of the material presented in this report is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program.

Any investment decisions must in all cases be made by the reader or by his or her investment adviser. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that the investment objectives outlined will actually come to pass. All opinions expressed herein are subject to change without notice. Neither the editor, employees, nor any of their affiliates shall have any liability for any loss sustained by anyone who has relied on the information provided.

The analysis provided is based on both technical and fundamental research and is provided “as is” without warranty of any kind, either expressed or implied. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

David D. Moenning, an advisor representative of CONCERT Wealth Management Inc. (CONCERT), is founder of Heritage Capital Advisors LLC, a legal business entity doing business as Heritage Capital Research (Heritage). Advisory services are offered through CONCERT Wealth Management, Inc., a registered investment advisor. For a complete description of investment risks, fees and services review the CONCERT firm brochure (ADV Part 2) which is available from your Investment Representative or by contacting Heritage or CONCERT.

Mr. Moenning is also the owner of Heritage Capital Management (HCM) a state-registered investment adviser. HCM also serves as a sub-advisor to other investment advisory firms. Neither HCM, Heritage, or CONCERT is registered as a broker-dealer.

Employees and affiliates of Heritage and HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while publications are in circulation. Editors will indicate whether they or Heritage/HCM has a position in stocks or other securities mentioned in any publication. The disclosures will be accurate as of the time of publication and may change thereafter without notice.

Investments in equities carry an inherent element of risk including the potential for significant loss of principal. Past performance is not an indication of future results.