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Last week's market action had to be a bullish trader's nightmare. Each time one of the daily sessions started to keel over, nobody was there to put on the brakes, put in a supporting bid and do some buying. This caused volatility and volume to pick up, as the high-frequency jockeys jumped on the short side of the trades, causing Wall Street to display its worse showing since last November, while they made a killing on the downside.

What caused this recent sell-off binge in the first place was once again this little mouse named Greece which certainly knows how to roar; it sent the main players of the world's financial markets into a panic mode. Not being able to form a government after its last election, Greece will hold another one on June 17 which its radical left anti-austerity party is most likely to win. This party's young leader is telling the Greek people that his party has the ailing Spanish banking system by the throat and will squeeze hard if Europe does not comply to his demands for a continuous and less onerous bailout package. This is the kind of talk which gives Wall Street the jitters because nobody knows where it will end once this first domino has fallen. This is why last week's steep correction was not the beginning of a down-trend in the market, but the setup to a crash.

So where to from here? Last weekend, the U.S. president was hosting the leaders of eight major industrial nations, also known as the magnificent 8, in an effort to tackle and solve Europe's financial mess. One favorable outcome would be for these EIGHT to underwrite the Spanish banks which are in trouble. This would put Greek's radical left on ice and give the market a reason to rally again. Last week's sell-off in Wall Street and markets around the globe was fueled mainly by the financial and political chaos in the eurozone nations, as it has been on and off for the past two years or more. Anytime the news breaks from over there that Armageddon was just around the corner, Wall Street sells off, only to rally to new highs in the ensuing comeback. So here we are witnessing the scenario again, only that this time the global economic recovery is stronger and broader based than it was two years ago, and that will put a base under the next rally. So all it takes is for the political leadership over there to help bring the Greek tragedy to a happy ending, and the global markets should be soaring.

Checking these three troika charts, SPY, BGU, and BGZ, does not make for a favorable outlook on the market from a bullish perspective. The green, red and yellow MA lines are in a bearish configuration for the SPX bulls, and in a bullish configuration for the bears. That is not what market rallies are made of and this is why for as long as these three charts look like this, any rally in Wall Street will be suspect.

Now check this VIX Short-Term Futures ETF chart and note that there is hope for the bulls yet. As this UVXY index comes soaring off the bottom - which is always a bearish occurrence for the market - its internal green, red and yellow MA lines remain in a solidly negative configuration, and that is always bullish for the market.

(click to enlarge)

So which will be proven to be correct here, the Troika or the VIX Future's ETF? In case the downside prevails, try these leveraged bear ETFs to take advantage of it:

And oh yes - why did Facebook (NASDAQ:FB) have such a lousy IPO? Because while everybody is talking, only a few are buying and that does not make for satisfied advertisers.

Source: Is The Market In Trouble?