Volatility Expected to Continue

A recent article posted on Yahoo Finance, “Wall Street Week ahead: Market is oversold but major signs say “sell”, warns investors of a volatile week ahead.  Corporate earnings have come to an end and lingering concerns with the Euro and Greece persist.   US economic data is raising doubts about our pace of growth. 

This is a drastic change of tune from many talking heads saying that the market could only climb higher from over estimated optimism.  It’s no surprise that this over optimism is designed to bring down the fear gauge, a tool used to predict trends in consumer behavior.  The philosophy being, the less fear investors have (or the more confident investors are about the economy) the better markets, or indexes, will perform.    I feel what we are experiencing is a reality check, and issues like Greece defaulting are being pulled off the back burner and are taking center stage.  It’s no secret that this is another round of volatility we are likely to see for several years.  

"The market is extremely oversold. Nonetheless, all major indicators remain on sell signals," Larry McMillan, president of options research firm McMillan Analysis Corp, said in a report on Friday.

"We expect a powerful but short-lived rally should be coming soon. But at this point, barring some major shifts in our indicators, it may only be a rally in a larger down-trending market," McMillian said.

A disappointing debut of Facebook did not help the market’s case last week.  Although Facebook did just better than breaking even, other social media sites took a hit for the worst.  Technical glitches in over traded securities added fuel to the fire.