Stocks opened lower Monday following a weekend of new concerns over Greece’s likely exit from the European Union. Europe’s major bourses closed sharply lower, and debt yields rose as the euro fell against other major currencies including the dollar.

At the close, the Dow Jones Industrial Average fell 125 points to 12,695, the S&P 500 lost 15 points at 1,338, and the Nasdaq was down 31 points to 2,903. The NYSE traded 802 million shares and the Nasdaq crossed 449 million. On the NYSE, decliners outnumbered advancers by 5-to-1, and on the Nasdaq decliners were ahead by 3-to-1.

The not-so-new headline “Greece May Be Out” was back again, and with it came a rush to the dollar. I use the PowerShares US Dollar Fund (NYSE:UUP) as a convenient benchmark for viewing the dollar vs. a package of foreign currencies. Yesterday the dollar was under enormous buying pressure and by executing a “break-away-gap” confirmed last week’s upside break of the UUP’s intermediate resistance line. The gap up is a powerful signal that demand for the dollar will continue, and thus UUP should head higher. Unfortunately, there is an inverse relationship between a higher dollar and other investments like stocks and various commodities.

The decline from 1,343 to 1,338 might be only five points, but its technical significance is much greater. The support zone at 1,343 to 1,357 was formed over a month (February to early March), and yet the selling pressure of just one week cracked the hard-fought support zone. This breakdown changes the intermediate trend to down from sideways and sets up the market for further selling.

Taking a broader view of the S&P 500 shows a band of support at 1,264 to 1,292. This is the target of the current decline. It is calculated by taking the high of the year, 1,422, and subtracting from it the recently failed support zone numbers. In the lower half of the target zone is the 200-day moving average, now at 1,277. In a major breakdown, the stochastic (internal indicator), though oversold, could remain oversold for weeks.

Conclusion: Technically, the stock market is in a short- and intermediate-term decline, but the overall, long-term trend remains up. The market is highly volatile, and any positive headline from Europe could result in a sharp rally. However, we must go with the charts, and this new breakdown means that to stabilize the downtrend, buyers would have to drive prices north of 1,357. Instead, yesterday’s breakdown looks like the beginning of another selloff. Long-term buyers should hold cash and only buy quality stocks on days with sharp selloffs. Speculators should be selling short or initiating highly leveraged bearish strategies.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.