Market Recap for Thursday, August 17, 2017
For now it's just a short-term issue, but money is rotating to defensive areas and fear is rising. The Volatility Index ($VIX) jumped over 32% yesterday to close at its 5th highest level of 2017. The highest close of 16.04 is just 3% away so clearly nervousness is becoming an issue and is driving these much larger daily selloffs. The NASDAQ 100 lost more than 100 points on Thursday, its sixth such decline in the past three months. Prior to May, the last time the NASDAQ 100 lost 100 points was on September 9th, 2016. This volatility is definitely becoming unnerving. But worse yet, traders are growing accustomed to it as we see rallies follow. This is setting up market participants for a much larger drop and a VIX move above 20 in my opinion. That wouldn't necessarily be a bad thing as it would help to alleviate the weekly negative divergences that have signaled slowing price momentum since earlier this summer.