Update on the Financial Market Mood

I promised yesterday that I would continue to monitor the “mood of the market” until there was some sort of cohesion.  Friday’s close on the Dow Jones was up 60.93 points.  However, the index shot up as many as 170 points, only to then see a decline of 240 points midday before settling at the close of 11,444.61.

So what is the mood?

Largely relieved, is the answer.  The Department of Labor jobs report, and the news that the European Central Bank would consider buying distressed Italian and Spanish debt, mostly settled investors’ nerves.  However, it still seems to me that there is a contingent of important investors that have large downward bets on the direction of the financial markets.  Read: hedge funds that have shorted the markets.

In part, I think this is one of the reasons why yesterday’s financial market sell off was so pronounced.  Program trades, and shorts, may have created the critical mass necessary for a powerful slide.

So is it time to buy, especially since stocks, on average, are 10% cheaper than they were two weeks ago?  No, not quite.  Why?  Its just my experience as an investor speaking here.  I usually only like to buy after several consecutive strong up days after catastrophic falls; all the while with an intuitive eye directed toward that critical “mood of the market.”

Jason