Greece Decides To Take Its Medicine

The market is getting a small bounce this morning on some solid economic news, and a rally in the euro after Greece announced its austerity plan.

Greece has vowed to reduce its deficit by 4 percentage points, to 8.7% of gross domestic product, by the end of 2010. That would still leave the deficit above the euro zone's 3% limit. Greek gross public debt exceeds 113% of GDP, the second highest debt-to-GDP ratio in the European Union.

In econ news, the February ISM Services Index came in at 53.0, up nicely from January's 50.5 level. Also, the ADP Employment report was in-line, showing a loss of 20,000 jobs. The big govt. jobs report is on Friday, there has been chatter lately that it could be weaker than the consensus is looking for.

The bounce in the euro is coming at the expense of the dollar, but that is boosting commodities and related stocks. Oil is higher at $80.85 and gold is also higher near $1142.

Materials stocks, like gold miners (GDX) and steel (SLX) are leading the action so far. Healthcare (XLV) is lagging. And among emerging markets, India (INP) is outperforming.

Asian markets were mostly higher overnight; the 10-year yield is higher to 3.64%; and the VIX is another -2.5% lower to 18.58.

Trading comment: The market has hung in well, even as it is getting overbought again. I am sticking with stocks that have broken out recently and continue to show good relative strength. I would feel comfortable adding to many of these names on a pullback.