The stock market is a type of control system which is a combination of components that act together to maintain actual system performance close to a desired set of performance specifications.   The flash crash of 5/6/2010 was a terrible black eye for the U.S. stock market because that day’s volatility has not yet been adequately explained – raising the question as to whether the stock market is out of control.   This question leads to uncertainty in the minds of investors.  Uncertainty similar to the Greece/Europe situation is magnified.  The result is heightened market volatility.

Two announcements are needed in order to reduce uncertainty and calm the markets:

1. The U.S. Securities & Exchange Commission (the SEC) must announce new rules on how the U.S. stock exchanges transact and operate – effectively putting the system back into control.

2. The member countries of the European Union (the EU) coordinate with the United States, Japan, and other majority economic powers to support the Euro and the European banking system.

In my opinion, both announcements will occur.  But, I am unsure of the timing.  If the announcements occur in the next week or two, the Greece/Europe situation will not derail the global economic rebound – and, the stock markets will probably rebound from their recent sell-off.