In case you missed it, the CBOE volatility index, aka - the fear index - spike up over 81 this morning. O.M. G.!!!!! It looks like Main Street (I recall hearing something about that in the debates) is really worried - or was.
Check this chart:
A member of a chat room - sorry, can not recall the name - slapped some elliott waves on it when it was in the 60s and sure enough it worked! Time for some mean reversion.
The VIX has been trampling records for weeks but this time it seemed to be coupled with news that the economy is perceived to be heading into the toilet. One look at the loser board Wednesday bore that out:
$DJUSHV -16.12% DOW JONES US HEAVY CONSTRUCTION INDEX
$DJUSBS -16.69% DOW JONES US BASIC RESOURCES INDEX
$DJUSOQ -17.43% DOW JONES U.S. OIL EQUIPMENT, SVCS & DISTRIB INDEX
$DJUSPP -17.80% DOW JONES U.S. PAPER INDEX
$DJUSFR -17.80% DOW JONES U.S. FOR RY & PAPER INDEX
$DJUSOS -18.39% DOW JONES U.S. EXPLORATION & PRODUCTION INDEX
$DJUSNF -18.85% DOW JONES U.S. NONFERROUS METALS INDEX
$DJUSCL -19.29% DOW JONES US COAL INDEX
$DJUSST -19.34% DOW JONES U.S. IRON & STEEL INDEX
Yikes! This list was published in Thursday morning's newsletter and it cleraly shows panic in the economically sensitive sectors.
I am wondering - might we be seeing capitulation in the economy? Forget stock market capitulation. Everyone is looking for it.