So far this is a bounce on speculation that somebody is going to do something. That wouldn't be enough to move global stock markets except that after Friday's plunge they were as oversold as they've been since last November. 

How high markets will bounce depends on whether or not we start to see something more concrete than speculation as the June 17 Greek election approaches.

Here's a brief rundown of Wednesday's speculation:

Optimism that the European Central Bank's decision Wednesday not to cut interest rates makes an interest rate cut in July more likely. The logic here is that the vote Wednesday showed a sizeable minority of the bank's board in favor of a reduction in rates now. And that shows that the momentum has shifted toward an actual cut to 0.75% from 1% in July.

European Central Bank President Mario Draghi’s post-meeting press conference was so negative -- increased downside risk, more uncertainty, flat GDP, a lack of any economic momentum -- that it is being seen as a set up for a rate cut in July.

Key allies of German Chancellor Angela Merkel are signaling that they would be open to a debt-sharing deal to save the euro under the right rules. The fact that the discussion is now about the exact nature of those rules has convinced some investors that Merkel will agree to a deal at the summit of European leaders on June 28-29. 

The plan might be modeled on plans for a European Redemption Fund that would be backed by the $2.9 trillion in gold held by eurozone members. Countries would be able to transfer sovereign debt above 60% of GDP to the fund and the fund would be "joint and severally liable" for the debt. That might be acceptable to the German government, a Merkel spokesperson has said, if "joint and several liability" were changed to "several liability," which would limit the potential liability of individual eurozone members. I think here the logic behind the market's optimism is that if eurozone leaders are talking about this degree of detail, it raises the odds of a deal.

Comments by Federal Reserve Bank of Atlanta President Dennis Lockhart after a speech in Florida Wednesday that extending Operation Twist "is an option" are being seen by some traders as a set up for Congressional testimony by Federal Reserve Chairman Ben Bernanke Thursday in which he might indicate that the Fed will move soon on a new round of quantitative easing. I think that’s a lot to read into remarks that weren’t significantly different from what Lockhart has said in the past, but Wall Street wants to believe. The Federal Reserve's Open Market Committee meets on June 19-20.

I think the best way to think of Wednesday’s bounce is in the context of the kind of event risk calendar that I sketched out in my June 4 post.

After the big sell off in May, and with a very full schedule of events in June that might bring good news, short-sellers and bears would think about taking profits on the slightest provocation, I argued. I think speculation like Wednesday’s amounts to "slightest provocation."

The more the markets bounce, of course, the more that full calendar of events starts to become a list of reasons for investors who have made profits on the bounce to sell. The big unknown for anyone long stocks is, of course, the Greek election on June 17 where a victory by the Syriza coalition could lead to a rapid exit by Greece from the euro. Syriza leader Alexis Tsipras said on Friday that he would rip up the austerity deal with the European Central Bank and International Monetary Fund, and restore cuts to the minimum wage, unemployment benefits, and pensions. 

Wednesday ahead of a meeting with leaders from the G20 countries, Syriza has been taking a more moderate position with Yiannis Dragazakis, the member of parliament credited with drawing up Syriza’s economic program, saying that the coalition’s economic program was "flexible" and would take into account "daily reality."

I think that the Greek election on June 17 carries enough event risk that in the short-term it is likely to act as a limit to any bounce.

What happens after that date -- bounce or a return to the correction -- depends on the result of the Greek vote and the eurozone's reaction to that vote. (And don’t forget the June 11 International Monetary Fund audit of Spanish banks and the end of June report on the financial condition of Spanish banks from the independent auditors brought in by the Spanish government. Or that the Greek government looks like it will run out of money in July.)

At the time of this writing, Jim Jubak didn't own shares of any companies mentioned in this post in personal portfolios. The mutual fund he manages, Jubak Global Equity Fund (JUBAX), may or may not own positions in any stock mentioned. The fund did not own shares of any stock mentioned in this post as of the end of March. For a full list of the stocks in the fund as of the end of the most recent quarter, see the fund's portfolio here.