A Greek Disappointment

Following the results of Sunday's much-anticipated Greek elections, it appears that the "G" in the notorious PIIGS has taken at least one giant step toward austerity and keeping itself in the Euro Zone. In theory, those headlines should have prompted a memorable rally among equities other riskier assets on Monday. In reality, investors remained pensive about what will happen next in Europe and no such rally came to pass. In fact, following the Greek election news, oil, the epitome of a risky asset, actually declined. NYMEX-traded crude for July delivery lost 76 cents to close at $83.27. In London, Brent crude fell $1.56 to $96.05 per barrel. Gold did as well, snapping a six-day losing streak with a modest Monday loss.

By the time the closing bell sounded on Monday, the only high-beta sector that looked like it responded positively to the Greece news was technology, but the reality on this front is that bullishness with regards to tech had nothing to do with the Greece. There were some analyst upgrades and dip buying that served as better explanations for tech's move higher. Not to mention, Apple (NASDAQ: AAPL) jumped 2%, a move that almost certainly has nothing to do with Greece.

The lethargy displayed by U.S. stocks on Monday should not be blamed on Greece. Rather, if investors are looking for a culprit, then Spain should take the brunt of the blame. While markets probably weren't all that impressed with what happened in Greece over the weekend, they are now showing they're far more concerned with Spain.

That much is born out by the performance of the ETFs tracking Greece and Spain. On volume that was nearly five times the daily average, the Global X FTSE Greece 20 ETF (NYSE: GREK) fell 2.5 Monday. In an even more concerning display, the iShares MSCI Spain Index Fund (NYSE: EWP) slid 3.6% on volume that was nearly 10 times the daily average.

So concerned are investors with Spain, the Euro Zone's fourth-largest economy, that yields on Spanish 10-year sovereigns touched 7% today, meaning the country's borrowing costs are soaring. The 7% yield area is also viewed by many market observers as nearly impossible to support and a sign that Spain will need a bailout for the entire country, not just its ailing banking sector.

Bottom line: The signals sent by Mr. Market are clear. The end of the Greek tragedy may or may not be here, but Greece has now taken a far larger problem, that being Spain. Any sign that Spain needs a bailout will surely whack stocks, crippling any good cheer from Greece in the process.