Greece Takes Us Down....Merkel Playing Hardball

There was bad news over the weekend as far stocks markets around the world were concerned. They preferred a yes vote from the people of Greece. Keeps things status quo. Didn't happen. The people voted no on austerity. No status quo. Change is what they want. They figure they have nothing to lose. Markets hated the vote and down those futures went. Way down. In Europe as much as 4%. Our market was down 1.5%. As usual, that more than changed by the time we woke up this morning. The nastiness cut in half, and not only that, for a moment today, when things looked better overseas based on rumors, the market went green. It hung in there until Angela Merkel, the leader of Germany, told Greece there would be no supply of liquidity based on the terms they wanted. Unacceptable, thus no liquidity.

The market tanked right down. A bad day for our markets as the S&P 500 came closer to 2040, and for all intents and purposes, is now flat for the year with the Nasdaq 100 up a bit and the Dow down some. Seventh month in the base to nowhere. If the news out of Greece worsens in the next few days we should get our break lower below 2040, which would trigger a long squeeze of sellers. Margin calls would also enter the picture. The bulls will have to give it up thus today was bad news for everyone who wants a bullish outcome. Merkel played hard ball and she should. No free ride for inappropriateness but the market only cares about resolution. None today. Greece and the Euro zone at complete odds gave the bulls a headache. We're getting close folks. Hold on as things could get very nasty if the crisis with Greece doesn't get resolved VERY SOON!

The usual culprits were out and about today with regards to weakness. The semiconductor stocks along with the transports behaving badly and they were joined by just about everyone else. The banks giving it up today. No one around to save the day. The banks had been the best saviors on recent selling episodes, but today they couldn't pull off that trick as the Greece news is potentially very bad news for the financial's. This market has been all about rotation month after month. Astounding how money has found a place to hide when the market needed the savior to come forth.

We're starting to lose that savior these past several days. Commodities also basically useless. The SPDR Gold Shares (GLD) barely up on a day where four years it would have exploded. Nothing good for the bulls. The transports are already in a bear market and in some ways maybe that's not so bad as it is getting quite oversold. Maybe they'll soon find their lows, but to this point there is nothing technically saying when. The chart a disaster and it's now being joined by many other sectors, thus the struggle for this market to hold 2040 much longer unless something special changes. Hold on folks as it's about to get really interesting here for equities.

Understanding a market's true intentions can be difficult to do, but sometimes not so. That said, we need things to unfold positively in Greece to fully understand the markets next move. If Greece gets resolved, and we blast up, that makes sense. That's when we learn, however, what's next up for this market. If a large gap up on the best possible news is sold we know the story. When the best news can't sustain gains you know the best times for this bull market will have ended. At least temporarily if not a lot longer than that.

There's no way to know for sure until we get that one piece of news that gives us the final understanding we're all so desperately wanting to know. So, from that perspective alone I am begging for a resolution. If we get closure, positive closure that is from Greece, and we still lose 2040 on the S&P 500, then it's likely lights out for the bulls for some weeks, or most probably, months to come. So we watch and we learn. Day by day we learn. Let's hope for the best possible outcome for the people of Greece who could really use some good news in their lives, while at the same time allowing us greater understanding on the markets next true intentions.