Are The Wheels Coming Off In Greece?

The markets are down sharply this morning, in what looks like continuation selling from last week's selloff.  Yesterday's action appears like a brief reprieve at the moment. 

The news washing up on our shores from Europe centers around the political turmoil in Greece again.  A new leftist leader is making some threatening comments that not only should Greece not accept any more bailout money but they should not ratify and even renege on the last 2 bailout deals they made.  His comments would seem to pave the way for Greece exiting the euro at some point.  Greece's stock market has plunged in recent days.

In earnings news, today's big disappointment comes from retailer Fossil (FOSL).  FOSL management lowered guidance and made some very negative comments about the picture in Europe.  FOSL stock is getting crushed by nearly -40% today, and it is weighing heavily on a host of other high end retail and apparel stocks.

Overnight action in Asia was mixed.  The dollar is getting a boost today, while commodities are lower again.  Oil prices have pulled back to $95.50 while gold prices are down all the way back near the $1600 level.  One silver lining would be if gas prices at the pump fell which would be a boost to the consumer ahead of summer.

The 10-year yield is fading further, now down to a yield of 1.82%.  As for the VIX, it is up more than 10% so far breaking above the $20 level and testing the April highs near 21.

Trading comment: The S&P 500 has broken the near-term support levels traders have been watching near the 1360 level.  It is currently trading near 1350.  I would say the next support area comes into play near the March lows at 1340.  Yesterday I cautioned that the recent price action meant the market has more work to do before this correction fully plays out.  But corrections are part of the investment landscape, so one should learn from their previous mistakes and try not to repeat them.  Stay defensive, raise cash to levels that you can sleep comfortably at night, and start making a list of stocks that are holding up well or are poised to rally when the selling looks exhausted.