"Don't panic, don't panic", cried Jonesy, in Dad's Army, as he ran around like a headless chicken. That is the general message going around in financial circles.

City professionals are renowned for their uncontrollable use of jargon, but even worse is their need to used cliched phrases.

Just like share prices recently, they have been tumbling out. The strangest one so far is the much-used "healthy correction" to explain the fall of more than six per cent in the market in the space of a week.

"The froth in the market has been blown off" is another wise-after-the-event saying.

"A much-needed fall-back" provides no comfort to investors, unless it provides a buying opportunity.

In terms of value, the fall in the week works out at about £97bn.

This sounds like an awful lot of money but, as ever, these things need to be put in context.

Despite that week of losses, the market was still £10bn higher than it was at the start of the year - although yesterday's turbulence will have upset that further.

The headlines involving the rocketing price of copper that led to a pre-1992 twopence piece being worth 3p in scrap value, brought home how silly commodity prices were getting.

Ironically, the damage to the market's value was seen most sharply in the commodity mining sector, despite commodity prices remaining firm.

Mining stocks were typically up by about 28 per cent on the year, before the price retreated, but are still up about nine per cent in many cases on the year.

The fall in the FTSE comes on the back of news that retail investors have so far this year invested record amounts in unit trusts.

The professionals managing investments on behalf of clients are often worried when the herd instinct of those not being advised are in force.

There is always a sneaking feeling that those not brave enough to have concentrated their efforts at the market low three years ago have now been tempted to do so at what could turn out to have been the temporary peak in the market.

Although it is early days to make any predictions, the relative calm of the UK stock market at the end of last week provides some comfort to the thought that the big drop was only a temporary setback.

One noticeable fact was the lack of a mass sell-out, with share trading volumes not significantly above the norm.

Companies in the FTSE 100 are still reporting increased earnings, as we saw with BT and British Airways last week announcing impressive results and, on this basis, the market is not overvalued.

It is logical to argue, therefore, that many shares are indeed undervalued at current levels.

Slipping into City jargon, the fall from the April high leaves the UK large cap stocks in a technically oversold condition. On that basis alone, we would expect to see a period of stability at the very least and possibly a rebound. The economic background to a bear market is simply not in place.

Usually, bear markets occur under the backdrop of rampant inflation and cripplingly high interest rates, neither of which are in force at the moment.

Nor do we have a collapse in earnings growth. For the time being, therefore, it is steady as she goes.

-*For investment advice contact Anthony Platts on 01642 608855.

Published: 2/05/2006