Black Monday?

If you are old enough to remember the notorious Black Monday in 1987, you know what had happened on that day:

All of the twenty-three major world markets experienced a sharp decline in October 1987. When measured in United States dollars, eight markets declined by 20 to 29%, three by 30 to 39% (Malaysia, Mexico and New Zealand), and three by more than 40% (Hong Kong, Australia and Singapore). The least affected was Austria (a fall of 11.4%) while the most affected was Hong Kong with a drop of 45.8%. Out of twenty-three major industrial countries, nineteen had a decline greater than 20%. Worldwide losses were estimated at US$1.71 trillion. The severity of the crash sparked fears of extended economic instability or even a reprise of the Great Depression.

It must be a gut-wrenching pain for those who had actually experienced the event. We haven't seen such kind of BM event ever since 1987, not nearly close to the severity as a ond day decline. So why did I suddenly bring this up today? Well, with the market only going up on a daily basis recently, a 2% sudden drop must be felt like a gut-wrenching pain, and for those heavily chasing the market right now, I guess today's daily drop, the most severe one so far this year, could be a BM type of crash for them!

With VIX shooting up 33% today, quite a lot of panic is induced for the "crash". Now all the sudden various indicators have become extremely oversold, at least for the short term basis. With this kind of high volatility and extremely oversold condition, I doubt we will see a lot more downside without first an attempt of rebounding in the next few days to a week. We may potentially see quite a strong rebound as we have often seen this year that has made numerous new highs as the result. With that thinking, I'm quite aggressive to open long side positions today, just trying to play against the herd, sort of buying when there is fear!