Well, the deal is done...almost. Greece avoids an unruly default and is in line to receive US$172 billion in fresh funds. The ECB agreed to losses, bondholders agreed to increase their losses, and the IMF agreed to help. By 2020, according to the plan, Greece's debt level will drop to only 120.5% of gross domestic product. Finland is the clear winner demanding and receiving collateral for any money they provide to the bail out.

A formal approval by Germany, Netherlands, and Finland is expected.

The deal involves outside monitoring of the Greek checkbook, which is a way to say Greece gave up a bit of sovereignty. Still...they needed the bond swap.

Markets rose initially on the news, yet in subdued fashion. This might be due to new reports describing the Greece debt situation worse than imagined and that actually almost twice the bail out amount was actually required. Reuters reports almost nothing in the new bailout goes to directly help the Greek economy. I think the market has to think about what has occurred and will then wait for large money players to show a direction. Euro reached as high as 1.3293, so that is the top of our range. 1.3190 area is the bottom of the range. Price should bang back and forth unpredictably until enough strength can force a break out of the basically $1250 one point range.

If 1.3293 is all markets can muster for enthusiasm, then we should assume the US dollar will very soon reclaim strength. This is important. Remember economic experts expect a recession in the world’s largest economic block...the Euro zone. If the US dollar starts rising again, we expect crude oil will pull back. Crude is testing a resistance area as I write. The trick here is to see what shows up in the Commitment of Traders report. If we see increased bets against the Euro, then the best minds in the business are sending us a very strong message. Anyone counting on a short covering in Euro is disappointed so far. Still the day is young...

Euro zone is far from fixed as reports surfaced of grocery stores in Spain accepting bartered goods for payment. This is the last thing any government wants to see but is reflective of consumer survival skills. This behavior most likely will expand before it retracts. Remember Spain is just one of the next shoes to drop. It will be interesting to see if ES falls back into the channel or makes a run for daily chart R1 at 1370 area or R2 1379 and then falls. We will talk about this looking at the charts. Everyone has huge psychological attention paid to the YM (Dow Jones Industrial Average), which touched 13,000. Are you as excited as the folks whose job it is to sell stocks?

Yesterday’s Wall Street Journal had this to say about the Russell 2000...”The small-cap Russell 2000 stock index has leapt 36% since early October and is just 4.2% below its all-time high, but investors have been steadily pulling cash out of small-cap funds.”

So the disconnects continue surfacing. How can the Russell 2000 keep rising when investors keep pulling money out? This is due to a lack of favorable alternatives in the field of financial instruments and global money must go somewhere. Global money rode the earnings season tide placing money in the futures. Also, in a below average volume market, it does not take as much to move a market in the futures even though exchange traded stock funds see redemptions.

Markets today will also factor in China’s eased monetary policy and might assume this could cause Euro zone to avoid an expected recession.

Bottom line for Tuesday...we need to see how the US market reacts coming off of a holiday weekend with relief over Greece or disappointment over reality.

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