Thu-Fri 10/27-28

Stock indexes went berserk on Thursday, with 3+% gains the norm.   Over 2% of this came within an instant of the opening.   There was a slight slide at the end of the day, and positive follow-through on Friday was nonexistent.

The explanation:

Stock indexes jumped more than 3 percent Thursday after European leaders unveiled a plan to expand their regional bailout fund and take other steps to contain the debt crisis in Greece.

Optimism ebbed on Friday as analysts raised questions about the plan, which left out many key details about how the fund would work. European markets mostly fell, and the euro declined against the dollar.

"It's a kind of sobering-up after a day of partying," said Jerry Webman, chief economist with Oppenheimer Funds in New York. "We got back to what's more of a square position, closer to where we want to be, and now we're going to take a couple of deep breaths and reassess what this really means."

There are still plenty of obstacles to overcome before the crisis is resolved. One troubling sign: Borrowing costs for Italy and Spain increased, signaling that traders remain worried about their finances.

OK.  I've got it.  A three percent across-the-board single-day gain was justified because of a poorly understood and not-thought-through event ON A DIFFERENT CONTINENT.  The next day's lassitude is taking a deep breath, because we need to reassess.

In other words, investors are damned fools, blowing around like leaves in the wind, and really have no idea what the hell they are doing.

Makes sense to me.

I wonder if Webman even realizes he has implicitly refuted the efficient market hypothesis?