Fear Returns to the Markets

Thursday, September 18, 2008 | 01:30 PM

The watchword during much of the current sell-off has been complacency.

We had major denial as to the breadth and depth of the problem. Remember back when Housing issues were "contained?" Do you recall that sub-prime "did not matter?" That the "Goldilocks economy" was just fine?

Those phrases will go down in history as aphorisms of the clueless, excuses by those who should have known better. Hopefully, someone will hold the perma-bulls, the money-losers, the idealogues, accountable.

Meanwhile, as the market panic has now increased to palpable levels, creating a tiny ray of hope: Fear has returned.

As the VIX chart below shows, there is some measure of panic. We have now spiked above all of the recent panics of the past 2 years -- but not nearly as much as we have seen in the 2,000, mid-2001, and 9/11. Those 3 prior panics set up the 2002/03 lows 2 years later.

The only question for traders is whether or not this sell off is closer to the ones seen over the past 2 years (in which case you can buy 'em here) or more like the 2000- 03 period (in which case we have more selling to go).

>

VIX Chart, 2000-08

click for ginormous chartVix_200008

>

Thursday, September 18, 2008 | 01:30 PM | Permalink | Comments (74) | TrackBack (0)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

bn-image

TrackBack

TrackBack URL for this entry:
https://www.typepad.com/services/trackback/6a00d8341c52a953ef010534b5fe6a970c

Listed below are links to weblogs that reference Fear Returns to the Markets:

Comments

I bought some UYG today (ultra-financials). It’ll probably go lower over the next couple of weeks, but I’m betting that I’ll see a profit by December.

Posted by: D.L. | Sep 18, 2008 1:38:55 PM

The comments to this entry are closed.



Recent Posts

December 2008
Sun Mon Tue Wed Thu Fri Sat
  1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31      

Archives

Complete Archives List

Blogroll

Blogroll

Category Cloud

On the Nightstand

On the Nightstand

 Subscribe in a reader

Get The Big Picture!
Enter your email address:


Read our privacy policy

Essays & Effluvia

The Apprenticed Investor

Apprenticed Investor

About Me

About Me
email me

Favorite Posts

Tools and Feeds

AddThis Social Bookmark Button

Add to Google Reader or Homepage

Subscribe to The Big Picture

Powered by FeedBurner

Add to Technorati Favorites

FeedBurner


My Wishlist

Worth Perusing

Worth Perusing

mp3s Spinning

MP3s Spinning

My Photo

Disclaimer

Disclaimer

Odds & Ends

Site by Moxie Design Studios™

FeedBurner