CHART: Volatility Rocks the Global Financial Markets

For the last several years, the U.S. stock market has been climbing higher in a calm and predictable manner. Even recent fears of a “Grexit” couldn’t shake the long-term uptrend in U.S. stocks.

Then suddenly, just a few days ago, things got real.

Turmoil out of China caused concern among global investors. First, Chinese stocks felt the pain. Within a matter of hours, panic selling set in as investors began selling off stocks, including U.S. stocks.

The global market selloff sent the U.S. volatility index ($VIX) soaring 300%+ in just a few days!

In fact, the volatility index shot up quicker than ever before… in history.

Fortunately, we purchased long call options on volatility near its historic lows back in June of this year. While we are happy with our current massive gains, it is still possible for volatility to jump even further in the weeks ahead.

Investors got a taste of volatility last week. And things could get even more interesting this week. In particular, keep a close eye on China’s PMI (manufacturing index) figures that will be released after the market’s close today. Economists expect those numbers to be down from last month. But any surprise figures could spark another sharp move in global stocks.

Major technical damage has occurred to the charts of U.S. stocks, and the path of least resistance is down. Be advised.

Until tomorrow,
Jerry Robinson

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