Anxiety is extraordinarily complex and there are many layers to it.
With surface anxiety, there are specific things we worry about of which we are fully aware. Arachnophobics fear spiders and they know it. The situational cue could not be more concrete or explicit.
Presently, the acute and conscious (or surface) fear is Europe. The market, behaviorally, exhibits this collective participant anxiety to Europe, in part, via this choppy volatility we have been experiencing since end of July into August
Beneath the surface anxiety though, there is another deeper layer of anxiety that is unconscious and much more difficult to pin down. It is experienced as a general low grade chronic state of worry that does not seem to really be attatched to any one concrete thing.
The source of this deeper layer of anxiety often concerns more basic needs such as physical or financial security.
Presently, this deeper layer of diffuse chronic unconscious anxiety is abnormally high. It likely has its roots in a longer term environment in this country, and globally to some extent, which has been unstable dating back to the bursting of the NASDAQ bubble and also including the 9/11 attacks, the anthrax scare, the war, the credit crisis, the Arab Spring and now Europe as well as our perception of the poor performance and volatility of the market over this period.
This has occurred over a ten plus year period and has placed a heavy burden on our collective sense of physical and financial well being.
These two types of anxiety, the surface and deeper layers interact in a complex manner. When the deeper level is elevated, it makes our responses to surface anxiety that much more pronounced.
In the market, this manifests by increasing collective participant reactivity to surface fears, hence the dramatic sentiment oscillation over short periods of time skewing negative as well as the erratic price behavior.