Guest Post by Sven Heinrich
Let me say up front: I’m not trying to scare anyone. $VIX 54 shock on Friday says people are already scared. My mantra remains: Keep calm. And I’m not one to scream bear after markets have already dropped and are in stress. As many of you know I’ve already done my warning screaming before this drop.
But I also want to be as realistic as possible with what’s going on here and the risks associated with it and offer a few perspectives and scenarios. So here goes:
We’re faced with the most critical time since the financial crisis. That’s not my opinion, this is what the $VIX says. It’s behaving in a very unusual and rare way and everyone better pay very close attention. When I made the $VIX 46 call in January it seemed like an idiotic call to make for $VIX moves into the 40’s are extremely rare. But it happened and $VIX hit 46 a week ago and now on Friday $VIX hit 54 before again reverting below the trend line I had originally drawn in January (see Big Calls).
