As the world, and, primarily, the U.K. is divided by today’s Brexit news, market volatility has exploded.
The VIX, representing market volatility, jumped to levels only seen during the flash crash of August 24th last year. Similarly, the same level of market volatility was reached in February this year. Both moments marked a medium term bottom in stock markets.
Whether today’s market volatility explosion represents a medium term bottom or not is hard to say. So far, markets are showing a picture of a flash crash: sharp decline followed by a recovery.
The most important thing to watch is today’s closing price in the major stock market indexes. If the closing prices recover from their initial crash, then we could be looking at an interesting long term buying opportunity. However, it markets keep on sliding, today and next week, then investors should wait a bit until the dust settles.
In general, we should note that market volatility is created by electronic trading, mainly in futures markets. This could all seem very impressive, but regular investors cannot participate to this, as all these price movements mostly happen outside regular exchange hours.
(Click on image to enlarge)
Comments
Log in or sign up to join the conversation.