© Corbett Report
Last week in this column, as you might recall, I
noted that the coronavirus panic had already produced "the
worst week in the markets since the financial crisis, including the
worst two-day point drop in Dow Jones history." And I also warned that "the economic effects of this event are going to be very real and very profound."
Well, here we are all of one week later. And what a week it has been. Let's review the week in market headlines, shall we?
March 2 -
Dow surge is the biggest-ever point gainMarch 3 -
Dow drops nearly 800 points after the Fed's surprising news about the economyMarch 4 -
The Biden Bounce: Dow Futures Up 666 As Traders Forget About Panicking FedMarch 5 -
Global Markets Follow U.S. Stocks HigherUh oh! I've got egg on my face, haven't I? Here I was thinking a massive disruption of the global just-in-time supply chain was going to expose the Everything Is Awesome! phony baloney fiat economy for the Ponzi scheme that it so obviously is. But, as MarketWatch
tells us, "[a]fter the worst week since 2008, the Dow is now on pace for its best week since 2011." I guess
Trump was right after all: Everything is under control and this is a great buying opportunity!
So, are you feeling optimistic about the global economy now? Yeah, neither am I. Here's why:
Record-breaking point drops followed by record-breaking point gains followed by yet more dramatic downswings are not the sign of a healthy and happy market. This is not conjecture; this is age-old accepted market wisdom.
Market volatility is of such interest to market watchers that it has its own index, the CBOE Volatility Index (better known as the VIX). In fact, market volatility is such a key early warning sign of market panic that the VIX has a nickname: the fear index. As any trader worth his salt will tell you, big up and down swings in stocks are a clear sign that the market is about to take a major turn. Now, true, that "major turn"
could be a turn to the upside or a major turn to the downside, but I think we can all agree that if stocks are going any direction as a result of this massive global economic disruption, it will be to the downside.
So take a look at the VIX
right now. If you extend the chart to its "MAX" setting, you'll note that in the past week the VIX has reached levels (54.18, to be precise) that have only been seen once before in the entire 30-year history of the index. Want to guess when that was? That's right, in October of 2008, when the VIX topped out at 59.89.
Translation: The fear index has never been more certain that we're about to have a major market disruption since the Lehman collapse threatened to wipe out the global economy.
Comment: :
Sleepy Creepy Joe has been on the downhill slide for some time now, but it seems to have accelerated in the last six months:
and this