Another Open Market By Selling Pressure

The market really plunged yesterday in the opening hour, but quickly regained its footing and closed with just modest declines by the end of the session.

Today, the market again looked weak before the open. I think it probably would have opened lower, but some of the comments from Fed Governor Poole may have calmed the market. Here are some of his comments:

• Stock market valuation "does not seem to be elevated" at this time
• 'No pressing need' for action after stock sell off
• Does not see evidence to justify ongoing stock market declines
• Sees nothing in carry trades that is disruptive at this stage
• U.S. recession always possible but probability not very high
• Probability of U.S. recession "a little higher" now than it was two years ago

Inverstors are probably a little shaken from this week's volatility, as evidenced by the heightened readings in the VIX. And with the media going on and on about the unwinding of the yen carry trade and the pressures in the sub prime mortgage market, it isn't surprising that investors are growing more rise averse.

But the 10-year yield hangs in at 4.53%. If things were really bad, it would probably be trending lower. Gold is down a lot over the last week, which should quiet the inflation bears. And oil continues to hover in the $60-64 range.

I think the market needs to spend some more time consolidating. Big gaps down in the charts don't heal themselves overnight. But stocks will recover and go on to new highs, and investors will once again look back at another solid buying opportunity with regret.