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Explosion In Equity Markets Or War Among Machines?

Explosion In Equity Markets Or War Among Machines?


Call it Black Monday part 2, call it Dow behaving like Bitcoin. The fact is that the S&P500 index lost over 1 trillion during this month .

Looking at the market reaction, it appeared that something exploded on Wall Street because the Dow Jones was dropping like a rock and traders were feeling that nothing can stop that.

In other words, it was a war, a war between machines. Aglos triggered once again! The regulators need to address this issue because a drop like this is worse than anything on the street, we are talking about real companies with revenue streams.

The volatility index exploded and there was a major fear among investors to get a margin call and I am talking about those accounts which do not have high leverage. The most interesting aspect was that we didn’t see the mammoth move in gold and the reason for that is because it was the war of machines and this was not 1987- at least for now.

The volatility index on the other hand exploded quickly and surpassed levels which we have not seen in years.

The first job for the upcoming Fed President now is not to talk about the interest rate but explain what the Fed has planned to stop this panic. Forget about the rate hike cycle because if the collapse of the market continues at this pace it wnt be long before we will all be talking about QE round 3.

By looking at the market reaction today, one thins is for certain that we are in for a rough ride and Trump can’t blame this one on Obama. I have a strong feeling that this sell off is going to intensify because bears are seeing blood on the street and all they want want right is infront of them.

Columnist | FORBES
Chief Market Analyst | ThinkMarkets

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