Another Volatile Week Ahead...

The first week of every month is the most volatile week of each month because of the release of several heavy-weight economic indicators all in one week (Jobs report, ISM index. See economic calendar). This week is made even more volatile with uncertainties surrounding the government rescue plan to buy toxic waste from the market. For now, it is certain that Papa and Mama has agreed to go to the beach afterall and is now deciding on the budget issues while the kids wait eagerly with their bags already slump on their shoulders. Economists are still worried about the long term effects of this rescue even though it really could help end the stock market slump... for now. The Dow reflected this uncertainty by persisting in its neutral trend so far, waiting for the first brave cowboy to rush in (I suspect those "cowboys" who used to rush in had already closed down...er... you know who?). With no institutions daring to be that first hero (heros die young), there is an obvious lack of investor leadership in the market so far. Ok, let's face it, everyone's scared and nobody wants to be laughed at for being the next one to close down for rushing in blindly. Oddly, all these things might just add up to make the stock market even more efficient, moving towards the ideal efficient market theory. The stock market has been a lot less volatile than it used to before the last crisis and this crisis is going to make the market even less volatile and more efficient as investors become even more risk aware. More efficiency = less volatile = lesser chance of explosive gains... could this be the end of trend and momentum trading? Not now of course but it is without a doubt that the stock market is indeed moving towards the once laughed at ideal state of efficency.