STOCK MARKET RALLY IMMINENT ON GREEK NEWS BREAK

A roaring market rally is probably imminent on the announcement of a favorable Greek resolution, as EU Finance Ministers are meeting in Brussels and there is impetus for the debate to come to a close today.

Greece has little time to close a deal with its euro-zone partners, with enough time for them to return to their home nations and get approval. For this reason, today's meeting is probably the one in which a deal is agreed to in principle. It is in nobody's interest for Greece to leave the euro-zone. Greece cannot afford the upheaval it would cause to its economy, and its government cannot risk driving it there. The euro-zone has no interest in returning to a climate of chaos and question about the EU's future. Germany even cannot afford to lose the weaker members of the euro-zone, lest the euro gain too much strength against the dollar and harm its exporting activity. A deal must come, and it should come momentarily.

Market action this year has been telling me something. The dollar has gotten extra lift against foreign currencies due to weakness in Europe and Japan, and due to the Greek disruption. Interest rates have come down in the U.S. to record levels, and stocks have been stymied in their tracks due to the uncertainty in the world.

But as the Greek issue is resolved, the flight to quality ends, and capital leaves U.S. treasuries for U.S. equities. The dollar will decline, gold and the SPDR Gold Trust (NYSE: GLD) and other relative ETFs will soar in value, along with gains oil and other commodities priced in dollars. The PowerShares DB US Dollar Bearish (NYSE: UDN) should rise and stocks should soar broadly. The SPDR S&P 500 (NYSE: SPY) has significant upside ahead of it near-term on this news, as do other broad market indices.

In order to leverage this move, I have been long the National Bank of Greece (NYSE: NBG) since it was a dollar a share; long the Global X FTSE Greece 20 ETF (NYSE: GREK); long Bank of America (NYSE: BAC) on the expected rise of interest rates; short the PowerShares DB US Dollar Bullish ETF (NYSE: UUP); and short the iPath S&P VIX ST Futures (NYSE: VXX); and long other equities.

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