Last Thursday the US stock markets dropped almost 10% in less than 15mins. After the weekend, the markets then jumped almost 5%. Those are major market moves in less than 3 business days.
What I see is that Mr. Market is currently dealing with symptoms of Bipolar disorder. The market was manically depressed Thursday and then hysterical on Monday. If you blinked, you probably missed everything.
When someone has major mood changes in a short period of time, they are not stable. It usually means that the person is clinically depressed. A normal person would not show signs of major mood swings. And a normal market would not show signs of major volatility. I would diagnose Mr. Market as being in the stages of depression.
Yesterday's Euro bailout of $1 TRILLION helped make Mr. Market really happy for a day. It was like the global markets were given a shot of Prozac. But, the problem with drugs, like Prozac, is that it provides a quick fix, but no long term solution. The crisis in Europe was caused by country's having a lot of DEBT. And the EU's solution to it's Debt is... MORE DEBT?! It's like paying your student loans with a credit card! All of this doesn't make sense and it's not good news for the economy in the long term.
The markets are truly depressed and Debt Deflation will be upon us.