NEW YORK SHARES

By Paul Vigna

If anything is going on Sunday besides Father’s Day, you wouldn’t know it from looking at the U.S. stock market.

Stocks rallied again on Friday, capping off two weeks of sharp gains ahead of what everybody says is a critical election on Sunday for Greece, which could not only decide its future within the euro zone, but the future of the euro zone itself. Given that the European Union collectively is the world’s largest economy, this should have the market’s attention.

But it doesn’t, apparently, and the main reason is because the market’s got a bout of stimuli-induced amnesia. Simply put, the markets believe that the world’s big central banks, primarily the Fed and ECB, will step into any breach opened up by the Greek election.

The Dow gained 115 (0.9%) to 12767 today, rising 1.7% on the week. The S&P 500 rose 14 (1%) to 1343, right above 1340 that represents a technical resistance range. A relief rally on Monday could smash it. The Nasdaq Comp gained 36 (1.3%) to 2873.

Since bottoming in early June, the Dow’s up about 5.5%. Now, keep in mind the important caveat that the volume’s been low this whole run. Still, somebody’s out there buying.

Nothing good happened today to get stocks so juiced. A trio of data points — the New York Fed’s Empire State survey and reports on industrial production and consumer sentiment — all showed a weakening economy. Germany reiterated that it will not renegotiate Greece’s bailout, no matter who wins Sunday. A stare-down seems imminent.

But for the market, it’s relatively simple. There are three broad outcomes for Greece: the pro-bailout parties win, the anti-bailout party wins, or its another deadlock. The first is good for the markets, the other two are bad — unless those bad outcomes spur the Fed or ECB into action. That’s the thinking in the market, at least.

“Don’t think this is Greece,” Stifel Nicolaus trader David Lutz said, “I think it’s Ben next week. Either way, with or without QE – It seems priced in, thus may be a ‘sell-the-news’ event.”

The fundamentals of the situation are far different. No matter what happens Sunday, Greece’s future within the euro is questionable. While the nation is largely seen as the first in a line of dominoes, its importance isdiminishedwhen you consider that two larger dominoes down the line, Spain and Italy, are falling all on their own.

Nothing that happens Sunday is going to save Spain’s banks, or drive down Italy’s debt load. It may buy the eurocrats more time, something at which they’ve become expert. But fundamentally the European crisis comes down to a choice: toward the United States of Europe, or a break-up of the euro fellowship. A moment of reckoning will come, and it may be indistinguishable from the much-feared “Lehman moment.”

The only question is when.