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Market Preview: Bumpy Ride Ahead

NEW YORK (TheStreet) -- Buckle up, it looks like we're in for some turbulence.

This wasn't the way the market was supposed to react to news of Spain's bailout request. The idea last week was that taking concrete steps to address the situation would be a positive, a start toward crafting an aggressive solution.

Instead, all that $125 billion figure bought was a few hours of enthusiasm before the realization set in that another credit line might not be the way out of this mess.

When the closing bell sounded, the Dow Jones Industrial Average, which was coming off its best weekly performance on both a point and percentage basis, had swung more than 250 points from peak to trough, and the blue-chip index's year-to-date appreciation was back under 2%. The VIX showed rising consternation as well, leaping 11% on Monday to finish at 23.56.

One thing that last week's rally did seem to accomplish was setting a near-term low for stocks after May's debacle, and that should provide some comfort for the bulls, according to Gary Thayer, chief macro strategist at Wells Fargo.

"[T]he U.S. stock market passed a big test this past week, holding at important support after several central banks cut interest rates in order to boost economic growth," he wrote on Monday. "The stock market still faces other tests, including the Greek elections and the next Federal Reserve policy meeting. If the outcomes are positive, the U.S. stock market could be poised for a summer rally."

But that rosy view seems a bit too pat at the moment, given the headlines from Europe can turn at any time and there's not much to look forward to from Corporate America with second-quarter earnings season still roughly a month away. If $125 billion for Spain is being interpreted as little more than temporary bandage for the bigger problem, the eurocrats still have a lot of work to do (and monies to dole out.)

For its part, UBS is also staying optimistic. Early Monday the firm reaffirmed its year-end target of 1475 for the S&P 500, saying it believes stocks "are likely to rebound between now and year-end on the back of continued earnings strength and greater clarity from Europe." But that doesn't mean there won't be some tense moments.

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