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Contents: Oct. 2008 | Aug. 2007

In the midst of the 2008 financial market crisis Oct. 10th was particularly volatile.

2008 crisis The Dow suffered a sharp selloff of nearly 700 points early in the session to fall briefly below 8000 for the first time in more than five years. It heaved briefly into positive territory two times.
When it was announced late in the trading session that exposure to credit default swaps related to bankrupt Lehman Bros. debt was only 2% of the potential worst case, the S&P skyrocketed 11% in 40 minutes. A chaotic Friday ended with the day down 128 points, or 1.5%, at 8451.19

So you want to be a day trader?
Aug. 16, 2007 was an example of large swings during the day with no major news. This appeared to be the bottom of a correction caused by concern over a credit crunch precipitated by problems in the sub-prime lending market. At one time on Aug. 16 the Dow Jones Industrial average was off 343 points or 2.7% from its previous close. But it rallied to close only 15.7 pts. down.
2007 correction

See week chart

The Chicago Board of Options Exchange (CBOE) Volatility (Fear) Index (VIX) hit 37 on Thursday Aug 16.; This was the highest since Oct. 2002. It hit 43 in Aug. 1998. VIX measures market expectation of near term volatility conveyed by S&P 500 index option prices. People buy options to hedge against expected market declines. As investors get more fearful option prices tend go up.
It hit a record of 81 on Nov. 20, 2008
See: VIX FAQs at the CBOE

Vix volatility index

A New York Times article "Pack Mentality Among Hedge Funds Fuels Market Volatility" says "hedge funds with computer-driven or quantitative investment strategies attributed the volatility at the end of day trading." These funds have computer models with similar algorithms. Hedge funds as a whole have grown exponentially and now manage about $1.7 trillion It is these funds (stock funds, pension funds, hedge funds) which are causing the volatility rather than individual investors.

Nov 13, 2007 Dow
Dec. 11, 2007 Dow   Jan. 23, 2008 Dow

weekly change

See 2008 Recession for more

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last updated 10 Oct 2008