There We Have It

So volatility is back and the US market's got it!

The big move down last week represented a panic of some sort caused by a butterfly flapping its wings in Tonga. Seriously the move, which has been attributed to several things was a panic of some sort. The big moves up Tuesday and today I think are evidence that there is still a lot of emotion in the market, a lot, relative to what is normal.

I would suggest being prepared for more big down days in the next few weeks.

This does not have to be a bearish thing. We all know the market was range bound for umpteen months, the range now might simply be wider. A wider range may or may not be predictive of the next six months but can cause some anguish if you are not mentally prepared. Fair warning.

It looks like the yen is giving up a little ground, as posited yesterday as a possibility. I doubt this will be a one way trade back to USDJPY 122. I think 122 was too cheap and maybe 115 was too expensive short term and perhaps the yen is going to find a new equilibrium at some level, maybe 116-118?

To the extent that last week and this week is driven by the yen makes this a fascinating time. While I have placed a lot of emphasis in the last month and a half on the yen I have to start discounting the importance because the Stallion is now honing in on the yen.