Used to be that if you looked at the S&P 500 futures market you had a good idea of the market's psychology. No more, yesterday market was "all green" and opened up 1%, by 15:00 it was down 1% but closed up .81%.
this kind of volatility is due to very small trading volumes, and market participants looking for direction by pushing the price around. For investors it is a dangerous time, because the moves can be sudden. Old trader joke, the market takes the stairs going up, and the elevator going down...
The market is driven by forward earning estimates (determined by 25 year old recently MBA graduates), who are told by the companies they cover: "What to expect". Bottom line the actual performance and these indicators bear little correlation. in 2008 analyst were predicting earnings of $75 per share -- the actual number was zero (we also got the S&P500 at a close low of 666 -- how fitting).
American Companies have had a free ride with the past 3 years, via the weak US dollar. That's about to change with the trouble in Europe (don't believe the punters who say everything will be fine -- they are picking up dimes in front of a steamroller). Once the free ride of low costs dies (plus the high cost inflation in China) things are going to look more difficult -- you can assume that lots of the currency movements will be counted as "extraordinary items" -- Corporate America's new accounting game; costs you don't like are treated as extraordinary item that are counted after profits: HP is famous for its "non-GAAP accounting rules" The new CEO will probably do "lots of restating". BTW really enjoyed the fact that the departing CEO of HP -- after 18 months at the helm of the company got a $7 million severance pay. He was so good that the board could not wait to kick is ass out of the company... Maybe Meg can improve things?
Love American "capitalism" it rocks! Don't matter how bad you are in the executive suite -- you get at the very least an 7 figure payout.