It should have been down more yesterday. We know of so many negatives: Greece rolling the dice, giant losses worldwide in bonds, a strong dollar, a Fed itching to raise rates, the endless slowdown in China, commodities plummeting.
Yet it hung in. The futures look bad now, but they looked bad yesterday. So the big decline we are looking at, which should be a foregone conclusion given Green intransigence, might not be.
Indeed, yesterday should have been a debacle. Think about what has transpired in the last few days. We went from thinking that there were serious high-level talks that could lead to a big stretch out of payments to recognizing that the Greek government was apparently just playing with the Germans all along, with the idea that they never intended to compromise and just thought it was worth it vs. something that their own people seem to prefer: default and devaluation.
It's almost as if the Europeans were just being played as chumps all along. Somehow, they think there is no consequence to being kicked out of the euro currency and defaulting. It's like "so what, come get us, there's nothing here." But countries run on credit, and that's going to be over after everyone takes the haircut. As painless as the Greeks seem to think it is going to be, it will be worse for them than for those whom they default on.
No matter. For the narrative to go from benign to toxic and the S&P not to be down 3%-5% YET is amazing, especially when you consider that there's a Fed meeting this Wednesday where many wrong things could be said.
It isn't like mergers saved the day, either. Sure, Ryland (RYL) and Stocks Under $10 portfolio holding Standard Pacific (SPF) is a great tie-up and Dealertrak (TRAK) got a bid, and there were some more rockets going off in biotech, but there's not a lot of news flow.
To me, that means we should have been down more yesterday. Could it be a set-up for a "harder they fall" situation? Could today be the long-awaited 1%-2% decline ahead of the Fed meeting and the obvious collapse of Greece?
There's been so many opportunities to fail and go lower that a bull has to think, Jeez, if they aren't going to kill it ahead of the Fed and a pretty sure Greek default, maybe they will do so afterward, but the damage is almost always done before, not after.
Yesterday was what I call a positive down day, as oxymoronic as that seems. Could today be that way, too?