Late Day Rally Stems Declines
I don't think I've ever been relieved to see the market close down -370 points. But given how things were looking with an hour or so to go, the late-day rally was an improvement.
I think the markets are really anticipating some sort of coordinated rate cut, and won't be satiated until they get one.
The volatility index (VIX) hit a new high today, spiking more than +20% to 58.24. I believe this is the highest level since October 1987. And I would be surprised to see this level exceeded this year.
There were more than 1600 new lows on the NYSE, well surpassing July's levels. The market is now as oversold as I've seen it. To wit, only 9% of stocks are above their 200-day moving averages.
The Yen had a big bounce today, as it looks more likely that the Yen carry-trade that we used to watch closely is all but over. Everyone on the planet is trying to deleverage. The problem is, there aren't enough entities on the other side of that trade to absorb the assets (except the U.S. government).
I raised even more cash this morning, even as I feel we are reaching some sort of bottom. But the need to preserve capital is trumping capital appreciation at this point. I know at some point we will likely get a vicious snapback rally that makes these sales look silly, but in the interim I need to increase the sleep factor.
Is it only Monday? Have a good night--