I don’t know why Greece’s default was met with a yawn, but it was. I would have thought the market would fall some if that default were to occur. I didn’t expect a disaster, but some down side action would be expected, you would think. Greece isn’t big enough to cause a huge down draft, but it’s the old thinking of, if there’s one roach there’s likely more. Greece’s default, I thought, would lead to the thinking that more countries within the Eurozone were about to get down as well. The market simply shrugged it all off.

No other bad news took place over the weekend, so our futures were dead flat at the open today. The Dow stocks led the way, which means things were a bit more defensive, but it wasn’t anything major. The Dow closed green while the S&P 500 and NDX were overall flat. The Nasdaq was down decently early on, but the index recovered and was down fractionally at the end of the day. The S&P 500 was totally flat as it hovers near the major resistance level of 1370. The bulls have to be thrilled that the market showed such resiliency regarding Greece today after the bad news hit near the end of the trading day on Friday. The bad news being met with a yawn reaction is the classic sign of a bull market under way. I don’t think even the most intense bears would argue that this is exactly what we’re seeing for now. It can turn suddenly, but for now, it’s clear that bad news is being absorbed without too much, if any, technical damage.

There isn’t too much to think about. Bad news is being absorbed, because interest rates are simply too low. Folks need to be in and that’s what they’ll likely continue to do, until the interest rate cycle starts to move up in earnest. Small increments over several months won’t hurt the bullish atmosphere. In fact, it may help as most would take it as the fed is seeing improvement in the economy. In addition, foreign economies aren’t doing as well as ours, thus, foreign money is also finding its way into our markets here in the United States. The combination of low interest rates for years to come, and the fact that we’re told our economy is getting better, is a nice combination for the bulls to feel good about. The economy getting better may not be real, but we’re told it is, and for now, that seems to be enough for investors who really want to be in, and they won’t ask questions as to whether the news they’re told is good.

The fed will speak tomorrow. The last time they spoke, they failed to mention that QE3 was about to be put into effect. No mention of it whatsoever, and this smoked commodities, especially gold and silver. The gold and silver bugs will be tuned in hard tomorrow to hear whether the fed leaves out QE3 again. If he does, it could get ugly for those commodities again. I can’t say that for sure, however. All I know is that they were very unhappy about QE3 being left out last time. You have to think, if it happens again, it could get a bit ugly in that area of the stock market.

Speaking of commodities, we are also watching the price of gasoline. One has to wonder how long an economy can hold up with the stress being put on everyone with regards to the cost of filling up their gas tanks. It’s not good. What’s the breaking point? I don’t know, but it’s not good to have prices this high with there being absolutely no indication whether it will get worse, or not, in the months, if not years, ahead. It’s interesting times, for sure. The market is shrugging it all off for now. We must continue to play it that way, but it does make everyone who’s a bull nervous, I would think.

1355 S&P 500 down to 1315 S&P 500 is support. 1315 is tremendous support. These are the key exponential moving averages, down to that 1315 long-term down trend line. So much support for the bulls to have on their side, and it seems to me, it would take a very nasty external event to get the bears to capture, and take out, 1315. There are also strong gaps as support. The bulls have built up a very powerful wall for themselves. 1370 is major resistance, and the bears are fighting it. However, we have been trading near it for quite some time without falling precipitously below it. During that time, we have seen all the major index oscillators unwind away from overbought. The market does have enough energy if it wants it to clear, forcefully, through 1370 on the S&P 500, but you can never remove the possibility for a correction of 3-5%. Things look fine for this market, but you have to be on guard for all possibilities. The fed will be very interesting with regards to what he says, and maybe even more so to what he doesn’t say.

Peace,

Jack