Volatile week underscores the fragility of the ox market



Stocks were already falling when the EU's energy Chief warned the imminent nuclear disaster in Japan. It doesn't matter how many u.s. investors ever heard of Guenther Oettinger and other reports from Japan were not serious enough. Dow Jones fell 200 points below four hours. "The market went up so far so fast, the investor surveys were showing a high degree of bullishness, the kind we associate with the peak of a bull market often says Gendreau, the financial network, a financial consulting company."Whenever you're fully invested in shares – when everyone is on one side of the trade you are very sensitive to bad news.


Dow Jones moved by more than 100 points on four consecutive days last week. At some point he gave up all its gains of the year, as investors digested the world events from a possible nuclear meltdown in Japan, earthquake, riots in Libya and other signs of improvement in the US economy. But the week's end, the Dow stood again this year by more than 2 percent.


The message for investors: get used to volatility like this. US companies, in most cases, they are in good financial condition. Profits are expected to be strong for the first quarter, has never had more money. However, events in the world-like nuclear disaster in Japan or a demonstration in Saudi Arabia--could quickly Jolt investors.


S P 500 index & is down about 5 percent since their recent highs reached in February, according to Standard Poor's &. That's enough drop to qualify what the market technicians call the move. There were 53 losses of between 5 and 10 percent since World War II, according to Standard Poor's &. Most of the reductions have Pullbacks at around 7 percent on average, requires an average of two months to get back to even.


By measure, the market can recover its losses before the summer – unless something else happens to spook investors. Higher gas prices and concerns about the impact of the earthquake and tsunami on the third largest economy and the possibility of a Government shutdown in the u.s. over the budget fight things qualify. "There is a lot of uncertainty and a lack of knowing hate markets," says Gendreau.


Moody's investors service warned on Friday he said that if oil prices stay around $ 100 a barrel, it's at risk the global economic recovery. Carmakers, airlines and companies that have hit farming hard. Oil prices could soon surge if Japan weans itself off nuclear power. Economists believe that oil prices above $ 130 can push u.s. recession.


Above all it is the Federal Reserve, which effortlessly gives $ 600 to stimulate the economy and buoy stock markets expires at the end of June. The Fed's stimulus plan has helped the S P 500 gained & 19 percent since Fed Chairman Ben Bernanke first hinted at the plan in August. Investors were ready to remove himself from bad news about the economy because of the faith of the Federation forces. Now, they get to see if the economy and stock markets can stand on their own.


"We don't want to think about new records per year until after we get past the end of the (Fed's bond-buying program), at a minimum, and perhaps not until the end of the summer when we see the impact of high gas prices on company profits," said Paul Zemsky, head of asset allocation and investment management and ING.


Stocks are bound to fall into another bear market, said John Brady, Senior Vice President babrokrim MF Global. Companies are largely healthy, he argues. That is, what should matter most to investors. In the market there are several bright spots. The Russell 2000 index of smaller companies lost 1 percent slide since the earthquake in Japan, that is less than half of the company's big pullbacks indexes like the Dow or S P 500 &. This is surprising, given that the smaller companies and riskier tend to fall most of the stock during downturns. Last year, for instance, the Russell index has lost 2 percentage points better than the S P 500 during fall & market which lasted from April to June.


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