There is an old Wall Street adage that you should buy when you hear the cannons fire and sell when they fall silent.  In other words, if and when Israel attacks Iran’s nuclear reactors, stock markets around the world will fall, which is a good time to buy.  When a sustainable truce is announced, the markets will rise, which is a good time to sell.

This adage have more value for the short-term traders than it does for investors who invest for the long-term and ride through down-markets.

However, applying that adage to the new Greek settlement, traders heard cannon fire, and stock markets rose in January in anticipation of the pending Greek settlement (and other factors as well, of course).  Traders were buying lots of stocks.  Still, there was an expectation that the traders would sell-off when the deal was announced.  Instead, there was very little reaction.  In fact, the Dow even flirted with 13,000 for awhile.

What does this tell me?  Traders don’t know whether to buy or sell because they don’t know if this deal will work or not.  (This morning, one of the major credit rating agencies downgraded Greece, saying a default was imminent.)  Lastly, because long-term investors did not rush in to bid up the market, that tells me they also don’t know if the deal will work or not.

Still, I think the all-important risk of systemic failure has been greatly reduced by the ECB’s new LTRO program.  In addition, the new technocratic leader of Italy is making real progress in opening up that huge economy. And, while every nation is different, the Greek deal does provide a useful template or starting point for any future bailouts, such as Portugal.

While cautious, I remain bullish . . . for now.