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Folks, there is global selloff taking place, and I have to tell you, this one caught me by surprise. I’m usually the one waiting for that thing that comes out of left field, but I definitely didn’t expect this. Right now, it’s looking like all bets might be off for that year-end melt-up scenario I’ve been talking about.

Europe, quite simply, is back in crisis. European markets are down 10% in two days, primarily because it looks like the Greeks are backing out of a deal. Greek Prime minister George Papandreou—or, the Tower of Jell-O, as I’m calling him—pandered to his constituency and is now calling for a referendum on his country’s latest bailout package. I guess that’s what you do in a socialist government.

This not only surprised every other leader in the Eurozone, it caught every investor around the world. And it’s basically put everything that we’ve been talking about since that $1.4-trillion bailout package was announced on hold. Naturally, our markets have reacted as well—everything opened in the red and everything more or less across the board is down more than 2-3% early in the session.

Believe me, like everyone else I was really hoping this story was ancient history by now. But once again, this political problem in Europe is driving down prices. And once again, uncertainty is hanging over the markets. All those people who were running into equities during that October rally are running right back into cash. Look at what happened to the 10-year when this news from Greece broke—it fell off the bed.

But once again, this political problem in Europe also taking valuation to some very attractive levels. I know what you’re saying: Jack, why do you get so friendly to the market during these dips? Let’s take a historical perspective.

A normal market—not one in a condition when it’s over-exaggerated or under-exaggerated—trades roughly at 15x earnings. A normal market also, by the way, has a 10-year interest rate of 6.67%. Now here we are, in a situation where we have 2% interest rates. And we could lose 20% on the earnings forecast—take that S&P down to an $80 or $85 range—and still be trading at 14x earnings. These are very attractive levels, folks. The question is whether we can ignore the noise.

Do I think the Eurozone will break up? If you’d have asked me two days ago I’d have said no. Today? I worry about it a little. But I also know that all it would take is one thing to counteract the Tower of Jell-O’s insane decision to reverse everything.

I’ve been in this market 30 years now. I’ve never seen anything like this volatility. Ever. On the one hand, it’s heart-wrenching. But on the other, to see these things move at the speed they’re moving is absolutely phenomenal. Keep watching the headlines today and watch how the markets react, especially after Europe closes. And more importantly, be careful out there and keep your powder dry.

Source: Greece's Jell-O Leadership Brings Markets To Some Attractive Levels