Part of our trade strategy in the past few weeks was informed by the notion that Greece would ultimately get a deal. We cited very specific reasons in the Greek Butterfly Effect, but the conclusion was very clear:

No, odds are they’re not going to let Greece default. They can’t afford to. The math has to work.

Now let’s be clear no deal has been ratified yet, but in the end Greece got steamrolled for now. And that was the main purpose. As we outlined Greece was the sideshow in a larger construct. And the Germans are no fools. The larger construct must be maintained and they, nor anybody else, can lightly afford the peripheral risk construct to come unglued. Specifically, Italy, Spain, Portugal and any other potential weakling must be prevented from playing the same card.

And so Greece was made into an example and a message was sent: Don’t you dare go there, we will crucify you. I put this visual out on twitter and people clearly got it:

Germany to Greece: here’s a gun, go shoot yourself. Germany to rest of Europe: anyone else want a gun?

— Northy (@NorthmanTrader) July 12, 2015

No seriously, there was no confusing the message. Today from the FT:

Watch what they do not what they say. The theater was grand in the past few weeks and we learned again what we already know: When it comes to monetary and debt policy the people’s vote does not count and the Greeks voted “OXI” in vain. The Greeks, now completely steamrolled, have to make a decision which includes a sell-off of their country’s assets:

German Chancellor Merkel: Privatisation Fund Worth Near EUR50 Bln To Include Recapitalised Banks To Be Sold Off To Pay Down Debt $EURUSD — Live Squawk (@livesquawk) July 13, 2015

Who will step in to buy them? A cynic may say that the oligarchs that have benefited the most from the very bailouts and QE programs that have indebted most nations and enriched the fewest of the few, will gladly step in and gobble up assets. We shall see, but it’s been a sad spectacle and nothing has been solved except a people made poorer and a construct kept in place by another can kicked.

From a trading perspective we have been clear throughout (Door Shut):

So why am I, the macro bear not shorting here, in fact, trading long exclusively this week?

The signals. One of the reasons we haven’t been making new lows is because we are so damn oversold and it just keeps getting worse.

One of the charts we have been referencing in technical charts is that of the weekly $NYSI (among others). But if it follows the script of the past few years we may be looking at a multi week rally before it is back to overbought:

We can’t know yet, but we locked in some nice gains. It is now OPEX week and one has to again wonder about the standard OPEX autopilot script:

Bottomline: Technical damage has been done to the macro charts, but this entire Greek crisis has not yet even produced a 5% pullback on US indices. As we saw with China: The powers that be are working hard to keep things in play. And as traders we can’t afford to be stubborn, but trade the set-up in front of us. And for the moment we are oversold during OPEX week.