"You bring me up and down!"

While Janet Jackson was singing about love and relationships, investors around the world could surely relate during last week's push and pull of wildly erratic markets. And we could be set up for an encore performance in the week ahead as anxiety persists in the European financial system.

The drama began on Monday when news of a pending bailout package for Greece sent Bonds lower, as investors pulled out of this "safe haven" and started looking toward stocks.

The very next day Stocks were back down, and Bonds were pushed up and out of their trading range, as 40,000 Greeks took to the streets to protest details of the bailout plan. 

Capping off the week of volatility was Thursday afternoon's Stock Market freefall scare, during which the Dow plummeted 998 points then recouped more than 600 points - all in the span of 15 minutes. 

Thursday's mysterious event, characterized as a "near-panic", may have been caused in part by a wave of electronically submitted sell orders being executed at a mind-boggling pace. Remember, a majority of trading in the markets is done by computer. With Stock prices down significantly, many computer triggers for sell orders were hit. 

These triggers began executing sell orders at "market price." With the enormous flood of market sell orders coming in, bidders pulled back, so there were very few bids to satisfy the sell orders. In such situations, the computer will keep seeking out the next available bidder in an effort to fill the order...no matter how low that bid is. One extreme example was the trading of Accenture (NYSE: ACN) stock, which went from $40 down to $0.14 (yes, 14 cents), then came all the way back to close at $41.09. 

The Bond market, which generally has an inverse relationship to Stocks, responded to these tug-of-war pressures and events with exaggerated ups and downs, as seen in this week's bond chart below.

This kind of tug-of-war makes the market very volatile - and underscores why it is more important than ever to work with a true mortgage professional who understands the market.

Counteracting some of the international angst last week was some positive domestic data and increasing sentiment that the US economy is improving.
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The Stock market's erratic behavior frustrated traders and investors last week.

In the end, strong domestic economic data, like Friday's better than expected official Jobs Report, was overshadowed by the drama in Europe and received less fanfare than it deserved.

According to the Labor Department, 290,000 jobs were created in April, well ahead of estimates for 187,000 new job creations. The increase was the biggest rise since March 2006. Overall, non-farm payroll employment has expanded by 573,000 since December, with the vast majority of the growth occurring during the last two months. 
Despite the job growth, the Unemployment Rate ticked up from 9.7% to 9.9%. 

The main reason was an increase in the labor force of 805,000. That's because unemployed individuals who do not look for a job for four weeks are removed from the labor force. When those people move back into job search mode, they are counted again - which can cause the Unemployment Rate to rise even when more jobs are being created. 

OVERALL, THE ECONOMY IS SHOWING SIGNS OF A RECOVERY. BUT IT'S STILL IMPORTANT TO SAVE, SPEND, AND BUDGET WISELY.