Greece, the Fed Hold Keys to Coming Week

NEW YORK (TheStreet) -- The Greek elections on Sunday and any news from the Federal Reserve should determine the direction of the markets in the coming week.

"If there's an overwhelming vote for the more pragmatic person in dealing with the European Union, that would be positive," explains Quincy Krosby, Prudential Financial market strategist. "If the result is not an outcome that has been captured by the markets, that would be a surprise" and could be negative, she added.

Krosby noted that about 70% of Greece's electorate has consistently expressed support for Greece staying in the eurozone but many voters don't really want the accompanying austerity measures.

"It seems like to a certain extent the market has already priced in Europe being able to handle outcome of election no matter how it goes," said Kevin Mahn, the president of Hennion & Walsh Asset Management.

Mahn says that Greece will eventually leave the euro and that Sunday's election results may market a step in that direction. But he adds that an exit from the eurozone won't happen overnight and it will take a while for global markets to feel its effects.

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He also says that if Greece leaves the currency bloc then Europe will work to shore up the rest of it.

"Europe is in the first or second inning of its recession, and the U.S. is in its eighth or ninth," Mahn said.

The Dow Jones Industrial Average closed the week up 1.69% at 12,765.89. The blue-chip index has risen 4.49% year to date.

The S&P 500 rose 1.28% this week to 1,342.73 and has gained 6.77% year to date.

The Nasdaq Composite ticked down 7.18 points, or 0.25%, this week to 2,872.80. The index has risen 10.27% year to date.

"The market's up today based on a resolution in Europe and them trying to take the Greek situation off the table in the short term," Mahn said.

In examining how the market reacted on Thursday to chatter of potential stimulus measures from the Federal Reserve, Krosby noted the importance of gold.

She said gold's move -- particularly in comparison to stocks -- was telling and may forecast how things will go in the coming week.

On Thursday, gold rose toward $1,630 but then fell toward the end of the session to about $1,620.