Back in the early part of 2001, when the tech meltdown was underway, the stock markets were incredibly volatile, as a look at the CBOE’s VIX index since 1990 shows:
A pattern emerged: throughout the week, things would get progressively worse, with Fridays ending down a few hundred points, the decline usually accelerating after 2 pm, or two hours before the close.
Then Monday, things would “recover”, with jumps of hundreds of points in the indices, which would disappear by the end of the week, when Friday would again bring things to a dismal close. Remember “buy the dips”?
This chart of the Dow Jones Industrial Average for the last two weeks looks familiar (a look at the TSX would show the same pattern, except it’s a holiday here today — the petrodollar hasn’t kept the TSX from following the US markets):
In 2001 a huge external shock changed the seesaw pattern the markets. This time?