STOCK NIGHTMARE - objective observation. one dimensional.
"Those who cannot remember the past are condemned to repeat it" -George Santayana.
13 week T-Bill (~3 month) peaked at World War 2 levels. Fear is obviously at historic extremes as VIX hit 48,40pts. Trend-wise VIX still respects the 120 week/~3 year MA-600. In recent history VIX has peaked at following levels (Jeremy J. Siegel, 2002 - Stocks for the long run pp.275-280):
1987 VIX @ 172pts - Market/dollar crash
1989 VIX @ 52pts - Collapse of UAL buyout
1990 VIX @ 40pts - Gulf war
1997 VIX @ 55pts - Speculative attack on Hong Kong Dollar
1998 VIX @ 60pts - Russian default & LTCM (Long-term capital management) bailout
2001 VIX @ 58pts - 11 Sept. terrorist attack
One has to be aware that VIX measurement has been changed from S&P100 to S&P500 in the 90th. Why do I think VIX is important? Because market as hole hedge their portfolio by buying index puts in opposite direction to cancel out the downside - also known as dynamic hedging.
Keep an eye on ABX
daily graphs.
Images linked from markit.com.IndyMac Bank is now marked as "Failed Bank" by FDIC (Federal Deposit Insurance Corporation). View full list of bank failures
here (dated back to Oct 2000).FED reserve lending highest ever, surged lately
here.
The instability continues as new problems emerges. Some traders say this market is the worst they've seen and they have been in the market for over 15 & 25 years (acc. to two traders). What have happend since subprime crisis? Bear Stearns (BSC) daily, FED interventions, flight to safety, continued detoriation in asset-backed securities (?) (daily indices from Markit) etc.
Maybe luck seeing this early '07 but one question remains, when will this end? In 20 years or tomorrow?
There was no bid in the S&P500 (ESH08.CME) and NASDAQ100 (NQH08.CME) futures which made it impossible to liquidate position or secure capital. This sometimes cause a stockmarket crash (i.e. forced liquidation of leveraged accounts, asymmetric hedges etc). Luckily the FED came out to rescue the markets with an emergency cut of 0.75 basis points in the interest rate, the biggest cut since 1982 (
FT.COM). Since then the market have behaved somewhat normal but with VIX close to 30.
The massive selling began in Asia followed by Europe and was about -5% to -10% per day during a two day period. This may be seen as an invalidation of the so called supercycle of globalization.
Robert Shiller's view on real estate in the US. He talkes about consumer confidence and refers to earlier studies by
Christina D. Romer. Her paper is found 
here.
Another studie has been made by Harold Bierman at Cornell University, found here. "We have nothing to fear but fear itself." -- Franklin Roosevelt 1933Dow jones (^DJI) took a big hit causing it to tank more than -3%, breaking any "TA" support. The news said there was a computer error. To me, it was to logical to be unlogical that it dropped so close to the ma100. But vertical drop of nearly 250pts in no time is strange, giving clues about possible systemic risk ahead because this has never happend. Trading collar was activated, read more about the levels for NYSE
here.
Since then the MA-600 on CBOE volatility index (
VIX) has been rising and the finance sector revealed its ugly face in early May.
Picture of Dow Jones industrials intraday timeframe using tick chart on my global surveillance system (3sec freq). Video below confirms event was not provider specific (Nasdaq tick chart).
This was not an isolated event; DAX30 in Germany had intragaps of 60pts, FTSE100 in UK had more than ten 1% intraday up & down gaps per 30 minute during one day.
Shows how the 10 percent drop in China index (^SSEC) affected US market (taken 11min after close):
The swedish pension system stopped working the following days due to heavy selling:
The Swedish exchange (OMX) showing the different sector indices close percent after the terrorist attack. All share index backed -7.75% on ~43% bigger volume than the day before. Europe was open but US exchange never opened that week. The S&P-500 futures during the actual event is shown to the right.
The S&P futures in the morning during the terrorist attacks. Notice that the first plane did affect the market but was recovered quickly. It was the second attack that took the market down for sure. The official markets didn't open until 17 Sep.
Long-Term Capital Management (LTCM) (1994-1998) went bankrupt.
It was later bailed out by several banks. There's a book about it, "When genius failed" (Roger, 2001).
Download the book here.
The video below, "Trillion Dollar Bet" is a short version of the extended version, downloadable 
here (195MB).
Eric Rosenfeld's analysis of LTCM at MIT http://marketsci.wordpress.com/2009/04/28/links/
Barings Bank (1762-1995) defaulted 1995 due to
accouting fraud. ING, a Dutch bank, purchased
Barings Bank in 1995 for the nominal sum of £1. Nick Leeson wrote a book about it here.
His homepage is found here.
Trailer of movie "Rouge Trader"
The black monday, -22.6% in one day. Actually the market started to decline two days before that vicious monday, beginning with -3.81% on Oct 14 (Thu) & -4.60% on Oct 15 (Fri). Research and charts published
here. (FED, 2006) Picture to the right is USD index vs. Dow Jones. Bottom picture is frontpages from Sun-Times, Los Angeles Times, The New York Times & media:
"The Great Stock Market Crash" as they called it, caused the great depression. From top to bottom it declined -90%. "Anyone who bought stocks in mid-1929 and held on to them saw most of his adult life pass by before getting back to even" -Richard M. Salsman. Right picture from the floor after the close. For details about the period click
here (H. Bierman/Cornell Univ).
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Biggest yearly declines during 1900-century in USA (Swedish text, columns are Year & downmove in percent):
Debt in all sectors (dated 12/31/02):
Some say it isn't true this time due to globalisation. They call it "super cycle":
