Previous VIX Spikes and Subsequent Price Action Thereafter

In spite of the record spike in the VIX index, Wall Street analysts are extremely sanguine about this rout, more or less dismissing it as bullshit. I have a problem accepting this given the massive panic in the derivatives markets and Yen carry trade unravel. After doing a lot of reading today, listening to some analyst conference calls, and digesting all US media about the markets, I have concluded they know very little about what is happening in Japan.

The previous times the VIX index rose by 25% in a single day:

2/27/07
2/5/18
10/24/08
8/8/11
3/12/20
2/27/20
3/9/20
10/13/89

What do you notice about all of those occasions?

In 2007, markets responded to a 9% drop in China, due to the “Shanghai Sneeze”, with wanton concern about capital flight. In addition, FOMC Chair Greenspan warned about a recession.

In 2011, and I remember this vividly from a hotel room in Turks and Caicos, markets collapsed due to Greek bank failures and the European sovereign debt crisis. The gist of it was, Germany didn’t want to hand over their money to weaker European banks and it took a long time for Germans to cede their independence to the ECB and absorb the losses of Greece, France, Portugal and Spain.

In 1989, markets underwent a ‘mini crash’ flowing the collapse of. $6.7b leveraged buyout deal for UAL, causing Wall Street to ponder about their retarded foray into junk bonds.

And in 2018, markets dropped over inflation concerns and rate hike fears. Remember this was during the ZIRP era and we always panicked over the idea the party could end.

The other spikes were paired with the either the financial crisis or the COVID lockdown panic.

Here was the $SPY price action during those covid spikes.

3/9/20 and 3/12/20

Each time we bounced and collapsed again.

Are you brave enough to enter Asian trade raw dogged without hedges or will you hedge and potentially miss out on a massive rally tomorrow?