Todd Harrison: Is the stock market about to hit a brick wall?

Europe is falling apart, there's gridlock in Washington and the U.S economy grew at an anemic 2.2% pace last quarter despite more than $10 trillion in stimulus. Still, there's an age-old adage on Wall Street that the reaction to the news is more important than the news itself -- and despite a steady dose of dour news, the S&P and Nasdaq are enjoying double-digit gains this year.

I was pretty bullish heading into 2012, and I'm extremely bullish "looking through" to a millennial generation that doesn't care about the difference between experience and skills. As we're apt to say at Minyanville, however, the destination we arrive at pales in comparison to the path we take to get there -- and that journey is increasingly concerning me.

Forget for a moment that Spain is trading at levels last seen in March 2009, when this artificially stimulated rally -- not to be confused with a legitimate economic recovery -- began. In a finance-based, derivative-laced global economy, what happens across the pond most certainly matters for stateside investors and, dare I say, citizens. It's not like we can wipe away Spanish debt (as they did in Greece, returning 25 cents for every dollar invested) -- much less that of the entire eurozone -- without causing some serious socioeconomic waves.

In terms of catalysts, the French and Greek elections are Sunday, and the smart money is betting that French President Nicolas Sarkozy will be ousted. This should result in deeper deficits for France and make them look more like Italy -- yet another domino -- than Germany, the perceived savior of the eurozone. Germany can't and won't do it alone, and if the German market breaches the 6,500 level, my technical lens suggests that it has room to decline 14%.

And it's not just the specter of risk aversion in Europe that keeps me up at night. The U.S is facing a fiscal cliff at year-end -- which may or may not be solved -- but is scary nonetheless. The only thing holding up stocks right now is low interest rates and obscene levels of government intervention, and, yes, that can continue. As an investor, you need to always see both sides of the trade -- and now you do. 

Todd Harrison is the author of "The Other Side of Wall Street" and the founder and CEO of Minyanville, an Emmy Award-winning financial media platform. Read him daily at www.minyanville.com.