As I discussed with my friend Tony and his fellow readers on this MacroStory blog (see comment section):
Around 3PM EST: I think if the markets finishes at session lows and the vix at around 45, then we might have the short term bottom. But if we get a end of session rally with a falling VIX, we might be due for another round of selling… We’ll see soon enough!
At 4PM EST: OK so we did end in the sessions low and VIX remained at session highs. We might have a capitulation here. I kept my IWM puts open and went long some IWM in case there’s a short term bounce.
In addition to that, market commentators are all panicking on Bloomberg TV. You hear things like "No one wants to end equity at this stage" or "why would hold shares?" or "I wouldn't try to catch this falling knife".
Traders are crying for daddy (Obama) and grand-daddy (The Fed) to come and get them out of this ditch. These geniuses who were making money during the rise thanks to their acute skills, are now losing money because the markets are mad and need to be tamed by politicians. It's disgusting, but it's the nature of the weak people to behave as such.
So I think a short term bottom might be at had, and I hedged a bit my long puts as stated above.
The big question is whether we are facing a scenario like 1987, or like 2007. The next several days will be interesting!
Wait & Pray.