Stocks are rallying
for three reasons. The vote by the Greek Parliament in favor of austerity measures today, averting default.

Then too, money managers are using an 8% decline in the stock market to scoop up stocks at reasonably attractive prices.

Finally, some buying represents portfolio adjustments by money managers, wanting to show certain positions in Q2 reports.

Today: Relief that the Greek Parliament voted in favor of the austerity measures needed to avert default is “today’s” hurdle for global stock markets and the DJIA can open higher, but run into problems around 12,380. The S&P 500’s upside looks limited around the 1320 level. Based on the U.S. stock-index futures action before the open, those levels are a stretch !

 

Brooksie’s Daily Stock Market blog: An edge before the market opens.

Wednesday, June 29, 2011 9:15 am EDT

DJIA: 12,188.69
S&P 500: 1296.67
Nasdaq Comp.: 2729.31
Russell 2000: 817.31

In coming weeks, we can expect buying and selling in anticipation of Q2 earnings reports expected in July and August. Bullish enthusiasm may fall short of that shown in April/May for the Q3 reports. “Surprises” could be more negative, that positive.

The Greek vote confirms something I noted in previous blogs and that is the negatives plaguing the stock market can vanish quickly. The same can happen with concerns for the U.S. economy and Congress’ approval of a debt ceiling increase. That’s what makes timing here tricky.

Can the market go lower ?

Yes, but can money managers afford to chance it and get left on the sidelines ?

No !

Without an accord on at least the framework of a debt reduction plan for the future and an approval of an increase in the nation’s debt ceiling, averting a default on certain U.S. obligations, the upside for this market is limited.

Worth noting, the Greek parliament vote today was just one important step needed by it in order to get funding, other hurdles follow. The vote was key to going forward.

What’s more, the BIG money must be able to see evidence of a renewal in the economic recovery that started two years ago, before it leaves the on-deck circle and steps up to the plate.

Both can happen over night ?

If the BIG money feels either, or both are imminent, it will move in ahead of the news.

I think more work needs to be done before buyers get aggressive. Odds favor another leg down.

That would be the one that stands to provide a very attractive buying opportunity, maybe as attractive as DJIA 10,700-10,830 (S&P 500: 1150). So much depends on how much fear is generated by the press about Congressional approval of a debt ceiling increase pursuant to a default on certain obligations by the U.S. government.

I don’t see that as happening, but “fear” can hammer stock prices prior to news of a resolution.

George Brooks
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The writer of Brooksie’s Daily Stock Market blog, George Brooks, is not registered as an investment advisor. Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. Readers are expected to assume full responsibility for conducting their own research pursuant to investment decisions in keeping with their tolerance for risk