The Great VIX Swoon

In the last few weeks, the VIX, aka the fear index, has been telling the story of equities's gyrations in the US as much as any other index. Of course, the epicenter of these seismic convulsions was elsewhere, in what, for brevity we could call Creditgeddon. As market pundits identified a bottom in the Friday, October 10's sell o, I, more modestly, saw a peak in the VIX intraday high of 76.94, attained on that day around 3 PM. [It turns out CBOE changed methodology for the computation of this index. You can still see charts with the old methodology's values, which thanks to CBOE's freely available data series (http://www.cboe.com/micro/vix/historical.aspx) can be seen attaining 103.41 last Friday.]

As the belated awareness that a deep consumer-driven recession stole center stage from the credit markets, the convulsion continued. On Thursday, October 16, my prediction was promptly taken out by a new record of 81.17. Keep in mind that previous record before we entered the current regime of panic was 45.74 in the wake of LTCM and the Asian financial crisis. You would hardly believe that vix in Latin means hardly. But consider this:

Vix socer Iphiclus, vix me grandaevus Acastus, Vix mater gelida maesta refecit aqua

a couplet from Ovid's Epistles which can be translated as

My father-in-law Iphiclus, the good old Acastus, and my sorrowful mother, hardly recovered me by sprinkling my face with cold water

Looks like the typical reaction to these days' VIX jaggedness. If this was the S&P's EKG, one would spot a heart attack or something to that effect in it: equities are swooning and falling fast.