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Since mid-December, major averages have risen over 9% and the S&P is off to its best start to a year since 1987, albeit on the lowest volume since 2008.
Bulls seek to keep the momentum going this week, which features a Fed meeting, another batch of earnings and U.S. economic data, as well as ongoing drama in Europe, including negotiations with Greek debt holders and the EU's decision to ban Iranian oil imports.
"There are no easy solutions and a lot of complicated answers" to what's ailing Europe, says Todd Harrison, CEO of Minyanville.com. "This Greek bondholder debt situation, which everyone is saying is going to find itself resolved in short order, we have to pay attention to that."
As of this writing, negotiations between EU finance ministers and representatives of Greek debt holders were continuing, with debt holders claiming they've given their best and final offer. Failure to reach a deal on a "voluntary" haircut for Greek debt holders could turn a manageable crisis into a chaotic situation.
Regardless of the outcome, the talks are "not only going have implications for rest of the sovereigns and how they deal with debt vis a vis private bond holders, but I think it's going to have a lot of implications up and down the financial food chain with regard to counterparty risk," Harrison says.
Such an event could trigger the "gut check" Harrison says is looming for the recent enthusiasm that's been generated by the rally. Still, he notes the market has shaken off a lot of bad news in recent weeks, including Google's disappointment and France's downgrade, and predicts the current rally could take the S&P 500 as far as 1360.
Aaron Task is the host of The Daily Ticker. You can follow him on Twitter at @aarontask or email him at altask@yahoo.com.
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