3 Dow Story Lines That Will Shake the Market Next Week

The Dow Jones Industrial Average (INDEX: ^DJI) is bouncing up 0.89% as of 11:20 a.m. EDT. The rally's pretty broad, with 28 of its 30 components up. The S&P 500 (INDEX: ^GSPC) and Nasdaq (INDEX: ^IXIC) have followed those gains, though their respective jumps of 0.70% and 0.58% lag the Dow.

The gain in American markets comes after European markets were down for most of the day. London's FTSE 100
is off 0.21%. Today's news is decidedly mixed, with consumer confidence
seeing a fourth straight week of gains while jobless claims saw an
unexpected rise.

However, while most stories on the markets
today will focus on those two storylines, they don't actually matter.
In a week, both data points will be forgotten and mixed in with the
never-ending barrage of market noise. Instead, if you're an investor
with an eye to what will drive markets in coming months, focus on these
three important story lines across the next week.
1. Greek elections: Will the Grexit scenario play out?
Greek
voters head to the polls on June 17, and there's plenty at stake. The
big story line to watch is whether anti-bailout party Syriza winds up
the victor in the elections. If so, the markets will almost surely
react in a very negative way. However, it's important to look beyond the headline of a Syriza victory and know what's at stake.

If
Syriza does win, its leader Alexis Tsipras has threatened to renege on
bailout conditions set forth when Greece received its $302 billion in
aid. It's a calculated bet. In Tsipras' mind, German chancellor Angela
Merkel would blink and not allow a disorderly Greek exit -- or Grexit
-- that could present huge problems to the integrity of the broader
eurozone.

However, before Tsipras could take any kind of
action, he'd need to form a coalition government. The forming of such a
coalition could result in compromises made to other parties. That is,
the bluster of campaign promises isn't always lived up to once
politicians have to compromise to push through their own agendas. The
bottom line is that you should be prepared for outsized moves in the
market next week after Greece's election, yet investors also should
know that a slim Syriza victory won't necessarily seal Greece's fate,
either.

2. The Fed meets: More stimulus on the way?
After
the Greek election, investor focus will shift back stateside. The
Federal Reserve meeting is on June 19 and 20. The odds of an asset
purchase program akin to a third round of quantitative easing probably
won't be announced at that date. However, investors will get a feel for
how sentiment in the Fed is shifting as employment numbers continue to
disappoint and economic growth slows.

3. Spanish yields in focus
Investors
don't focus on Greece because of its relative size to the world
economy. By itself, its economic output is about on par with the state
of Colorado. Instead, investors are zoning in on Greece because it's
the first "domino" of troubled European countries that are seeking aid.
The larger focus beyond Greece is Spain, the world's 12th largest
economy. In spite of the "bailout" that pledged nearly $130 billion to
Spanish banks, a series of downgrades hit the country's credit rating
this week. That's led to the yield on Spanish bonds continuing to
climb. Today they hit 6.96%. That crushing yield makes Spain's ability
to service future debt questionable.

Keep the long-term view in mind
The bottom line is that there are some huge events coming in the next week that should shake markets. I'd hate to be short the VIX (INDEX: ^VIX)
right now, as the level of market fear has plenty of catalysts in
coming weeks. The key thing to keep in mind is not to focus on
headlines or let fear get the best of you.

There are very
real threats in the market today, but abandoning the market at these
times tends to leave investors high and dry when the market rallies.
Instead of trying to time the market, if the European situation is
bothering you too much, my advice would be to shift to
very-high-quality brands with dominant global market share -- like Coca-Cola,
for example. These companies will fall along with the market, but
generally won't fall as hard. As a bonus, in a market rebound they'll
often be able to expand their dominant positions and offer great
long-term returns.

Take the long-term view

That's
it for this market checkup. While staring at stock screens all day can
be bad for your health, the best investors don't pull out of the
market. Instead, they find stocks they can live with for the long haul.
Check out The Motley Fool's special report on long-term investing,
where you'll find three promising stock picks for long-term investors, along with some tips on how to invest for your golden years. It's free, but don't wait -- get your report today while it's still available.
By




Eric Bleeker, The Motley Fool

Greek Vote Outcomes Range From Coalition To Euro Exit: Scenarios

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happy father's day to all fathers!
Something to read on this hazy sunday morning...

Make-Or-Break Summit Looms As EU Preps For Greek Fallout

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As you are aware on Sunday 17th of June, Greece will be holding another election in a second attempt to form a government. In contrast to the previous elections on 6th of May, these will have major consequences linked to them and it is highly expected that they will result in exceptional market volatility regardless of the outcome.

The threat of a significant gap during market opening, combined with the likelihood of the Banks and other liquidity providers to the forex market substantially widening their spreads and/or even suspending trading completely for an amount of time, indicates almost certainly that this is not a suitable trading environment to speculate.

It is strongly suggested that you consider closing and/or reducing positions prior to close of the market on Friday and take serious consideration of the risks you may face by trading during the early hours of Monday morning, prior to the markets settling. If you are planning to trade, it is highly recommended that you ensure you have sufficient information on the possible outcomes of the election, how these outcomes could affect the market and seek independent advise if necessary.

For your convenience please find below some useful information and the likely timeline relating to the Greek Elections:

On Sunday 17th of June at 19:00-21:00 the first exit polls will be announced.
After 21:00 the first official results will start to come out.
Around midnight we will have the first official results (estimated that 10%-15% of the votes will have been counted)


Early in the morning on Monday 18th of June the final results of Greek Elections will be known.
Later on in the afternoon the Greek President, Karolos Papoulias, according to the constitution of Greece, will give the order to the leading party to form a coalition government.

This is a procedure that could take anything from a few hours to two or three days, if we take in consideration the last elections that we had three attempts over a period of one week before they gave up the efforts of forming a coalition government.

You have to keep in mind that for a new government to exist, it needs to have at least 151 of the 300 seats in the Greek Parliament. The party with a plurality of votes gets a bonus of 50 seats and the remaining 250 are distributed proportionally according to the percentages obtained by those parties that received at least 3% of the vote. Therefore, the outcome is dependent on the party that comes in first, the number of parties that get into Parliament with at least 3% of the vote and the percentage that each party achieves.

Greece Races As Cash Dwindles With Europe Seeking Austerity
By Jonathan Stearns - Jun 18, 2012 1:48 PM GMT+080

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