Likely to be an uncertain week ahead

After the stock market got over with the interest rate cut celebration, they are again focusing on the sub prime problem. Market really has short term memory. Sometime I asked myself, what has changed in the past few months which cause the great fluctuation? Nothing. At least, I cannot find a strong valid reason myself, except risk aversion. Those are excuse for trader to come out to buy/sell the stocks. To a long term investor, it means chance to buy stock cheap. To a trader, time to make profit by shorting stock.

Having said that, of course market is a future predicting machine. People vote with the buy and sell action. If the US data does not come good, and the bank announces more losses/write down, they would vote against the market again.

These were said this week,

"The market is obsessed with these credit problems. People feel like they're standing in a mine field and they don't know where all the mines are," said Brian Gendreau, investment strategist at ING Investment Management. "We're looking for an opportunity to go back into equities. I just don't think next week is going to be the time. There's still just too much uncertainty."

Gendreau said the unfolding impact of the credit market mess on the sector have sparked speculation about whether firms are withholding bad news or "if the firms themselves know the extent of the damages."

Another characteristic of market, it is afraid of unknown. When the impact is unknown, there is no gauge, hence there is no end to selling. If it has became a certainty, the price goes up, people rushing in to buy.

Beside the above, a good article to round up this week. Why the Fed Will Cut and Cut Again.