Bears Getting Grizzly

1:20pm (EST)

Futures were down about 0.5% before the European markets opened this morning but got progressively worse before Wall Street’s opening bell. There are reports that the IMF (International Monetary Fund) is getting ready to cut the cord on Greece and will stop aid payments soon. If so, this would mean Greece could be insolvent as early as September. Of course, the IMF issued a statement saying it supported Greece and is heading to the country, along with the European Commission and ECB, to access the country’s progress in meeting its bailout requirements.

We mentioned Spain’s debt crisis would start to come into focus as its spread from region to region and its bond yields are soaring past 7% to another record high today. Meanwhile, Italy’s bonds are pushing 6.5%. Higher yields will make it harder for these countries to sell debt and we said both could see yields hit double-digits if things get real ugly.

It only took the talking heads 23 minutes after the open to mention the S&P Volatility Index ($VIX, 18.84, up 2.57) and here were our thoughts from Sunday night’s Weekly Wrap and this morning’s 9am update:

“The S&P Volatility Index popped 5% on Friday after closing at 15-and change on Thursday. We said the bulls would push the mid-teens on a continued test to the top of the trading range and Thursday’s low was 15.45. While there could be a test to the low teens, this would mean new market highs and at these levels volatility picks up, which we have seen in recent weeks. The bears will need to clear 17.50 to get the market nervous again and a break above 20 will get the talking heads worried.” (END)

The VIX opened at 20.41 and reached 20.49 before pulling back below 20 as the bulls have trimmed some of the losses.

As we head to press, the Dow is lower by 134 points to 12,687 while the S&P is off by 17 points to 1,345. The Nasdaq is declining 45 points to 2,879 and is below the 2,900 level.

Our current trades are getting some nice pops on today’s pullback so let’s go check the tape. Subscribers, check the Members Area for the updates.

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