Down goes the Dow

agip wrote:

some kind of crazy goings on in the volatility markets - the ETFs that track the VIX are going insane - up 30% or down 50% if an inverse.

Markets breaking and not working is NOT a good sign.

After hourse stocks are down less than a percent so this new vol is not 'real'

Fasanara Capital:

“Additional risks arise as ‘liquidity gates’ may be imposed, even in the absence of a spike in volatility. In 2012, for example, the price of TVIX ETN fell 60% in two days, despite relatively benign trading conditions elsewhere in the market. The reason was that the promoter of the volatility-linked note announced that it temporarily suspended further issuances of the ETN due to “internal limits” reached on the size of the ETNs. Furthermore, for some of the volatility-linked notes, the prospectus foresee the possibility of ‘termination events’: for example, for XIV ETF a termination event is triggered if the daily percentage drop exceeds 80%. Then a full wipe-out is avoided insofar as it is preceded by a game-over event.

The reaction of the investor base at play – often retail – holds the potential to create cascading effects and to send shockwaves to the market at large. This likely is a blind spot for markets.”

agip wrote:

if you can't take a 7% drop in stocks, you should not be in the stock market. If you sell after every 7% drop, you'll never make much money. You'll be one of those who make 3% in the market and wonder why they never get ahead.

Whether I should or should not be in the market, the fact remains that the market tanked 7% in 2 business days and someone with $1 million in equities lost $70k in those two days.

Not sure why you are so emotionally invested in not admitting this.

If you cannot deal with facts I don't think you should be giving advice.

Takens wrote:

My model predicts a sharp drop in the market starting on the week of 2/5.

I was right here.

Hey agip ignore the troll.

What a night this is turning out to be. Guys in our group called a meeting tonight. I am going for a 5-miler first, in the cold, to try to clear my head. Might be an all-nighter

I may have been wrong this might be bigger than i thought, for reasons beyond my knowledge.

Maserati wrote:

I may have been wrong this might be bigger than i thought, for reasons beyond my knowledge.

The bonds market, genius...

I'm just here to post on this thread in one of the rare times that its title is actually relevant. Down Goes the Dow!

Ghost of Igloi wrote:

Cash is the superior asset class when risk returns to the market.

Here is the original quote from March 2015, which certainly applies today.

The algorithms will be very successful in transferring wealth in the upward direction, as usual.

algos having a brain fart currently

Dow set to open 900 points down tomorrow. Down goes the Dow indeed

Ghost of Igloi wrote:

Ghost of Igloi wrote:

Cash is the superior asset class when risk returns to the market.

Here is the original quote from March 2015, which certainly applies today.

It took you three years to be right?

agip wrote:

VIX at highest levels since the euro/Greek crisis in 2011

These are levels of fear very rarely faced. Which is bullish for stocks once the open wound heals.

this, during the best earnings season in recent memory. So strange.

We're down 7% from all time highs hit very recently.

Bonds are rallying hard, which is bullish for stocks - says that things are working right.

I'm not doing anything yet.

The past 72 hours were good. Many in their 70's & 80's had far too high a percentage in equities. Many made a lot of money over the past nine years. Those over age seventy, please cash in your chips! GDP has been only growing weakly on an annual basis. The bull ride had to come to an end one day.

People overreacting as usual.

Yes but for 10 years now they have been over-reacting to the prevailing irrational exuberance.

It’s now 4:30am my time, and I am strangely calm.

“The collapse is fundamentally due to the unstable position; the instantaneous cause is secondary."

- Didier Sornette