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Greek Tensions to Persist in Coming Week

Tickers in this article: JPM ^DJI FB ^GSPC HPQ

NEW YORK ( TheStreet) -- Market anxiety is expected to stay at elevated levels in the coming week as the political turmoil in Greece goes unresolved.

The week is a very light on the economic and earnings fronts, and it comes right before the Memorial Day long weekend. That means major domestic drivers will be few, and investors likely will continue to focus on the overriding issues in Europe.

"The big question is 'what if' -type bad news like what if Greece leaves the eurozone soon?," said Ryan Detrick, senior technical strategist at Schaeffer's. "But what is important to remember is that no one has ever left the eurozone."

That bifurcated view of Greece's ultimate fate should continue to fuel volatility in global markets, Detrick said.

At the same time, the heavy selling witnessed in the past two weeks means the odds of U.S. stocks catching a bounce are increasing, he added.

"We are nearing some extremely oversold levels," Detrick said. "Should we see any positive news out of Europe next week, there is plenty of room to bounce."

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With the market eager for some good news and a reason to rally, such a bounce could come from European Union officials saying they would prefer to see Greece stay in the single-currency bloc or from Greece voicing a preference to remain there.

"But the big question is once we have that bounce, will it have any staying power?," Detrick said.

Michael Gayed, chief investment strategist at Pension Partners, had been very bullish about the prospects of the stock market, but he says he started shifting into bonds in early April.

"If you look at market action, it's been a nearly constant decline," said Gayed, who noted that the selling has picked up since the European elections on May 6.

That's when Greek voters made a clear statement against austerity and put the country on track for another round of elections in June, while the French elected socialist Francois Hollande as president, a leader unlikely to continue predecessor Nicolas Sarkozy's pro-austerity collaboration with German Chancellor Angela Merkel.

"Europe was going to take the path of austerity" to help stem the debt crisis, Gayed explained. "But then "France goes socialist. The elections in Germany dealt a blow to Merkel ... everything you understood about Europe has now been undone and is not valid anymore."

On Friday, Greece's parliament was dissolved to make way for a new round of general elections on June 17. This trip to the polls is being viewed as an indicator of whether Greece will be able to remain in the euro.

Worries are that the public will once again cast votes in favor of the parties rejecting the austerity measures included in the terms of the international bailout deal. This could lead to Greece defaulting on its debt and leaving the eurozone, an event that could have volatile consequences for the region if it shakes investor confidence in other countries.