The Dax index opened at its lowest point, and this is only a start
One thing is for sure that bears are feeling hungry today, so watch out because it’s dangerous out there. The question which is coming to many people’s mind is; how low can the market actually go? Well, things have only started to fall off the cliff and the reason that I am saying this is because if you look at the surge in the volatility index, it jumped nearly 40.34% yesterday or $6.73. That is the kind of moves makes you think that one may have kicked out a pit bull but unfortunately they have let in the dragon.
So this slump is not going to be over that easily as Asia have already borne the burnt of this year’s trade war which is fuelled with nothing but uncertainty. The Chinese markets are already in the bear territory so I expect the U.S. markets to continue to face the selling pressure.
If I look at the relative performance of S&P500, NASDAQ, FTSE 100 and VIX during the month of October, there is only one thing which is clear- there is only one rule; hunt or be hunted. The VIX index was down nearly -15% for the month and now it is up 27% up, that is a whopping move of 42% in less 10 days.
Above all of this, what is daunting is the fact that we have not seen any serious money flow for the king of safe haven-gold. The price is barely in the positive territory and this makes me think that things are a little whack. If this is truly a meltdown, then we should have seen at least $40 move. If history serves us right, this kind of move for gold is normal under that scenario.