mikesspamlessemail 12:18 pm on Wednesday, February 3, 2016

Wow. Haven’t been trading much…

Wow. Haven’t been trading much after some terrible whipsaw action. Just curious- how many people here think this kind of insane action is a precursor to another 2008/09 style crash? I think it’s a real possibility.

jsd501 12:27 pm on Wednesday, February 3, 2016

The only time the market crashes is when we have a depression or like the credit event of 2008/2009. All the other times the market went down was because the FED was in a tightening mode because of inflation. That does not mean that the market cannot correct 10% to 20%. As John Kenneth Galbraith said, the stock market has called 6 out of the last 2 recessions.
- mikesspamlessemail 1:35 pm on Wednesday, February 3, 2016
  
  The only real threat I can think of would be banks having a lot of exposure to oil projects that are dead now. Cyclical stocks, including GM which had incredible earnings today, have been pretty weak too which is a little troubling. I hope you’re right since we definitely don’t need a recession with the amount of leverage in the economy now.
  - Michta 3:36 pm on Wednesday, February 3, 2016
    
    Autos are a kinda sell the news event. GM hasn’t done much in years. I agree the oil/banks connection has me a bit leery with my short calls on uvxy as well.
    
    I sat through 2008 watching the carnage and it was so fast you were caught and stuck if long before you could do much. (pre vxx products btw)
    - mikesspamlessemail 5:10 pm on Wednesday, February 3, 2016
      
      God help us if there’s another 2008. Even the August meltdown blew up about half my account in a week, which I haven’t really recovered from. For some reason I can’t stay away from shorting UVXY calls, I think if the March 165 I sold expire worthless I’m finished with doing that. Already booked a really big loss on some January 2017 $170 that I sold way too many of. Talked to a broker who told me they had multiple clients with pretty big accounts end up with negative equity on that move in August, so I’m hoping there isn’t a similar move in the next six weeks.
      - Jeff 5:16 pm on Wednesday, February 3, 2016
        
        August was an exceptional event, bigger than any single day in the 2008 crash. It was the biggest volatility spike in history. If we enter another recession, it is doubtful you’ll have another explosion like that, but rather UVXY will progress up more slowly and possibly stabilize. If you look at the VIX in 2008 (since there was no VXX, UVXY, or SVXY yet), you’ll see its huge spike in October ’08, and then it slowly decreased from there, even though SPX continued to make new lows all the way until March ’09. http://vixandmore.blogspot.com
        
        mikesspamlessemail 12:07 am on Thursday, February 4, 2016
        
        Yep, unlikely to see that type of thing again. It’s a shame I got caught in a 10,000% increase in August 95 calls and didn’t have time to make any adjustments. I was actually close to 100% loss of capital, probably if UVXY had hit 90 instead of 80 that day would have done it. Incredible day.