After a yearlong recovery in the market, stocks have really taken investors on a roller coaster ride as of late. Despite strong corporate earnings in the first and second quarters and a rebound in consumer spending, investors are now bracing themselves for what could be a major correction --or even another bear market.

So what happened?

The European debt crisis, which began as a minor issue in Greece, has spread like wildfire to the rest of the European Union. The energy sector has been pummeled as the BP oil spill continues to drag on, taking with it the share prices of almost every company involved with exploration, drilling, or services.

In times like this, it's not odd to see drastic movement in your portfolio -- stocks that move by 5%-10% on barely any news at all. Let's look at some stocks that plunged on Friday, and examine whether any logic justified their shifts.

Company

Market Cap (in millions)

% Change

Previous Day Close

Arena Pharmaceuticals (Nasdaq: ARNA)

$223.57

(46.8%)

$3.75

China Natural Gas (Nasdaq: CHNG)

$111.59

(9.5%)

$5.81

Massey Energy (NYSE: MEE)

$3,060.00

(7.5%)

$32.36

Weight loss is never easy
Arena Pharmaceuticals, which had been waiting for the FDA's advisory committee to vote on its weight-loss drug, lorcaserin, doesn't have to wait any longer. Although lorcaserin was supposed to be safer than many weight-loss alternatives, the panel decided in a 9-5 vote that the potential side effects outweighed the benefits. Of course, this is just the advisory panel; the FDA will make its ultimate decision next month. However, things aren't looking great. Already, Vivus' (Nasdaq: VVUS) Qnexa, another weight-loss drug, was shot down by the FDA last Wednesday, while Orexigen Pharmaceuticals' (Nasdaq: OREX) new drug awaits a vote.

Arena has no drugs on the U.S. market and is quickly burning through its cash flow. A 47% drop in a single day is pretty drastic, but obviously the market doesn't see the light at the end of Arena's tunnel.

More reason to be cautious
There are more reasons to be cautious about investing in China than we'd care to admit; however, the rash of recent fraud and misreporting has drawn wide criticism to Chinese firms. China Natural Gas, a leading provider of compressed natural gas, just reported that its most recent financial statements cannot be relied upon. China Natural Gas wasn't alone in its high single digit drop on Friday; Fuqi International (Nasdaq: FUQI), the online Chinese jeweler, also dropped by about 7%. Investors may be getting fed up with the fact that Fuqi still hasn't filed last year's annual report and recently received a noncompliance notice from the Nasdaq exchange.

Slimming down an outlook
There's almost nothing worse than not being able to deliver on a promise. Massey Energy, last Friday, announced that it was cutting its productivity outlook for 2010 due to tighter regulations. According to Massey's CEO, "increasingly stringent enforcement actions by [the Mine Safety and Health Administration] across our operations and throughout the Central Appalachian region have resulted in lost shifts and loss of productivity." Patriot Coal (NYSE: PCX) and Peabody Energy both fell on the news as investors most likely tied the events together, although it seems as if this outlook cut may largely be company-specific.

Stay safe
In the choppy waters of today's market, you have to watch your portfolio carefully -- but be careful to distinguish between random volatility and a true change in fundamentals. If your stocks are jumping all over the radar screen, but your investing thesis remains intact, just sit back and hold on for the ride.

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Jordan DiPietro owns no shares of the companies mentioned. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.