Classic Panic in the Market (Again)

Today we saw the Dow Jones Industrial Average drop 998 points at the height of what can only be described as a classic panic in the market. The Official reason for this panic is concern about rioting which took place in Athens. The population there is unhappy with proposed measures to help rescue Greece from defaulting on their sovereign debt. Years of socialist spending programs with high taxes have taken their toll on this country known through the centuries for its intellectual enlightenment. Today the masses did not like that their pensions and welfare programs are being cut with even higher tax rates. The world markets responded by massive selloffs. Some speculate there was also a "trading error" at a major securities firm during the height of the selloff. (Side note: There may be a Congressional hearing three years from now investigating this issue to reassure us we are being protected from evil Wall Street.)

This comes at a time when the economic recovery in the U.S. is taking hold. Even the lagging unemployment number looked good today. Last week's Congressional hearings involving Goldman Sachs only helped erode confidence in our financial markets. So far the Greek crisis is limited to their European economic partners. Repeat: SO FAR THIS IS NOT A U.S. PROBLEM. There are many uncertainties in Europe right now besides the Greek crisis. Europeans were already holding their breath waiting for the outcomes of elections scheduled to take place in England and Germany. Markets never like uncertainty.

We are at a crossroads in the market. If uncertainty continues we could see the U.S. and other world stock markets continue to plunge. However, we did see a pretty good bounce off these intra day lows as bargain hunters stepped in. The market typically does not crash when everybody expects it. Regardless what happens in the near-term, we should see a retest of these intra-day lows as many technical indicators were breached today. This sell off could actually be good for the U.S. markets.

Until confidence is restored things could continue to be ugly. This ALWAYS leads to great buying opportunities.

Note: The above is for informational purposes only. Any decision to buy, sell, or hold a specific investment for a portfolio should be reviewed by your own personal investment advisor.