Premarks: It's All About Europe {Again!}

Once again our markets take their cue from both Europe and China.  Possible slowing growth in China and the EU debt crisis have taken center stage sending US futures lower by about 1%.  Of course it doesn't help that markets were short term overbought and hitting a point where they were vulnerable to a correction.  That being said it definitely looks like Europe has taken a turn for the worse over the weekend.  This is from the German magazine Der Spiegel:  

Greece has fallen behind with its budget cuts and is asking lenders for more time to meet the conditions of the 130 billion euro aid package. But that would require fresh help of up to 50 billion euros, SPIEGEL has learned. Neither Berlin nor the IMF are prepared to make that money available.  {Link here}.

It always seems like late summer is when the next crisis blows up.  We last discussed this along with market volatility here.  Stocks will open down now and will probably have at least a couple of days weakness.  We'll just have to see where stabilization comes in.  Stocks are still cheap on longer term valuation so that should provide a floor at some point.  There is a pretty good level of support for the S&P 500 around 1320-1325 which is about 3% below where we trade right now.  Not saying we'll get there but that's where logically one would expect stocks to try and stage some kind of rally.

*Long ETFs related to the S&P 500 in client and personal accounts.