The markets are continuing to bounce from their oversold levels last week. This morning, stocks are up sharply on news of a bailout package for Greece. The Dow was up 100 points at the open, although it is fading a bit at the moment. We will have to see if month-end buying keeps a bid under stocks into the close.

The big news is obviously the prospect for a German-led bailout package for Greece. Details are thin right now, but the rumors are that it would avoid a total restructuring of Greek debt with more details coming out by the end of June.

Asian markets were up sharply overnight, led by a 2.2% rally in Hong Kong. China snapped an 8-day losing streak with a 1.4% bounce. Even India rose, despite GDP in the country slowing from 8.3% to 7.8%.

In economic news, the Case-Shiller home price index showed prices fell 3.6% in March to a new multi-year low. Consensus expectations were for a 3.4% drop.

Commodities are rallying, aided by the dollar being pushed lower due to the rally in the euro. Oil prices have topped $102.50, and gold prices are slightly higher to $1537.

The 10-year yield is flat near 3.05%, after a prolonged slide since topping out at 3.6% back on April 8th. At 3.05%, the bond market really seems far more preoccupied with a potential slowdown than worry about the end of QE2 and what that might mean for buying demand for Treasuries.

Trading comment: Last week, we said the markets were oversold and we were buying for a trade. Today is day 4 of the oversold rally, and we are taking some chips off the table. We could easily see new beginning of month money come in tomorrow as well, which we would probably trim a little more into. At current levels, the market is still likely to be down a couple of percent for the month of May. June is likely to continue to be choppy, with lots of questions about what the environment will look like post-QE2 (June 30th).