after seeing the giant VIX spike i could not help it and picked some longs. tomorrow should be an interesting day.
for 2006 correction during may-july we had 3 vix spikes that coincided with local market bottoms. the spikes were very much comparable to the one today (top to base). S&P lost 80, 70 and 55 point on those days. compare those to >60 point loss from the most recent top and I would say we are very-very close to the bottom if the history repeats itself.
its not the beginning of a new bear market....liquidity is through the roof globally, its just a increase in volatility, look at the years 1995 and onwards, its pretty much repeating history.
Depends on the Chinese gov't (lending/stock controls), the weakening U.S. economy and tapped out U.S. consumer, and U.S. housing market, IMHO. Could be the start of liquidity contraction which would lead to a bear market. I think we see a massive pullback in all markets over the next 3 weeks to a month.
when something like this starts, liquidity spigot is left wide open. You know Bernanke's thesis was on preventing another Great Depression style collapse. Rates will most likely be cut, and economic reports will be fudged to justify it. So it would seem that hes not bending to the debacle in the markets but from justification given to him by the economic data. tommorrows GDP will come in weak, bear markets start when another asset class offers competing rate of return or better.
But even if the fed opens the spigot again, lenders are starting to severely tighten lending. And the yen carry trade truly is at risk of unwinding. If the fed cuts rates, I'm not sure it will matter as much as it did back in 02.
Heaven help the hapless souls who dare press the first rally to resistance tomorrow. They will learn the meaning of "overhead supply" up close and personal
think of it this way, the excitement is just starting. Its not over till the fat lady sings, and the fat lady just stepped on stage. dont you sense the excitement in the world?, housing got out of hand, and some got burned, but on the whole its not as bad as the fear mongers want you to believe. try and buy a house in some premium areas, and you will realize its still kicking quite strong. and the carry trade is not in trouble. the BOJ would be asking for another debilitating syndrome to grip its publics mindset. The carry trade will be around for a long time. The BOJ is hard at work manipulating its currency to preserve its export advantage otherwise China will destroy them.
I have to ask this because your quote blows my mind. Why would you want to go long because the vix spiked? I wouldn't go long until it started heading down.