Today was the weirdest day since 2008. Tons of things going on behind the scenes (what Art Cashin refers to as inside baseball). In general it was a day to watch and gain information. People who were trading really had not idea what was going on. It was pure speculation. It wasn't even good poker because there was no way to calculate odds. There were rumors flying everywhere. Even rumors on why rumors said what. Crazy, crazy day.
So first the bull case. There is a still a possibility this is like August 2007 where the problems came out, the market panicked, rallied afterwards to knew highs until November of 2007 before rolling over. I consider this very low probability as long as we remain under 1080 and than 1105.
Fundamentally I am extremely bearish and that has only increased in the last six months. I see very little to be bullish about whether you are talking about valuations or economic prospects. You talk to bulls and all they want to talk about is how good it is going to be and hence forward valuations are cheap. NO ONE has a FREAKING clue what six months from now is going to look like much less eighteen months to have any sort of idea of current forward valuation multiples. I will take the under on how strong economically we are supposedly to be.
So fundamentally I am bearish and it just a matter of getting the timing right.
In general, this Greece thing I think is going to drag on for awhile. The longer it drags on the more the market is going to get antsy. I really don't see how Germany is going to have any sort of meaningful bailout. I think the most politically they could do is some form of debt guarantee that kicks the can down the road.
The fact that on the Greek bailout news when it was all assumed to be good and done that we couldn't get above 1080 I think has to be looked at as bearish. There could easily be a pop tomorrow if Europe responds favorably to all this but until proven otherwise I think it will be short term.
I have trader friends who ping me alot and one of them asked me what I thought this did to the odds of a crash (I define as a down move of over 5% in the S&P 500 in one day). I said I thought they have gone up. In my mind we are still on crash watch alert. Germany has to be very careful at this point. If the wrong thing is said or the market doesn't get the assurance it doesn't think it is going to get, the disappointment could be ugly.
One other side point. Financials really did not perform well. Credit also did not perform very well. The two most important things to keep your eye on.