Wall Street terms you need to know

Specialist John O’Hara works at his post on the floor of the New…

It turns out that no one has a clue where markets are going at the moment.

The above chart shows that VVIX index (volatility of VIX index) rose to record, over current market turmoil, thanks to China, whose economic concern has created massive headwinds for global economy.

Now, markets are in rally mode, with the main stock indexes adding to gains after posting their biggest opening run-up of 2015. The higher the volatility, the rockier the passengers’ ride is from point A to point B.

“When uncertainty about corporate America reaches an all-time high…it looks like a buying opportunity to me; wait for your 5-day moving average to stabilize and it will likely be a good entry point”, Slok wrote. When traders have reason to be anxious, they might sell or buy a stock in larger amounts than usual, causing the company’s stock price to whipsaw around. It was still a volatile day, however, with the Dow industrials trading in a 420-point range, and the ups and downs were expected to continue. The VIX monitors volatility in S&P 500 options. It has mostly remained below 20 for the last few years, with occasional but fleeting surges higher. Indeed, as Simon Thompson points out in his column this week, since 1990 the Vix has only doubled once before in the space of three trading sessions – in August 2011 – and within a month the blue chip S&P500 was up nearly 6 per cent, and within three months was 12 per cent ahead. The index has pulled back significantly from those levels, closing at 30.32 on Wednesday. It has also soared above its long-term average of 20.