 Hey everybody, it's Hari Swaminathan from optiontiger.com. Today is Tuesday. I am in India So you'll see that date is Tuesday, Feb 6th 940 a.m. Here in the US It is still Monday, Feb 5th around 11 p.m. Or so Eastern time. Now we've seen a pretty significant sell-off in the last one week or so and In fact, I think right from this time from the high onwards the all of last week There was quite a bit of weakness and then of course in the last couple of days from last Friday onwards The market's just been tanking a lot. So now as you can see, this is a 50-day moving average and this is a 200 day so just in the last one week it has pierced through the 50-day moving average and It's just about to hit the 200 day. It may bounce off today again. The futures don't look very good It's down about 56 points. Yesterday, of course, the SMP went down 113 points, which is very very significant day, obviously And then the VIX went up by 20 points So and accompanying that was the highest volume we can see you know in one year. So Obviously markets are cracking and there's no real Specific reason except for people say that there's a Expectation of rising interest rates perhaps some inflation because of all the Tax reform and the tax cuts that are coming in. I don't my personal opinion Of course, is that I don't buy into that argument. There is something of course There's deeper that is cracking in the markets just because Interest rates may arise or inflation may go up a little bit It really shouldn't have this kind of an impact in the market and of course, you know We all are left to speculate then what could be the reason for such a Such a crack. So but before we get into that what I want to do is just look at the numbers As published by the Wall Street Journal and perhaps we can get some kind of an idea as to what we are witnessing here so this is an article on the Wall Street Journal and This you know, it says the stock market set off by the numbers and if you can see here's just a sample of some numbers At Monday's low. This was the Dow Jones Well had felt had dropped on an intraday basis by the most number of points ever and then once again Here also the largest one-day point decline the Dow drop below two thousand Milestones all 13 were down. That's no surprise. SMP was down. That's no surprise The CBO the VIX index rose by 117 percent It's biggest one-day percentage rise ever. So you can imagine even as far back as 2008 or 2011 the VIX did not climb up by so much. So all this all of this just says that there is some significant deep cracks in the market and you just left to wonder whether this whole Justification of interest higher interest rates and inflation can cause Such damage to the market. I I seriously doubt it I think there's something else that the big players are worried about and I'm not sure what I mean It's not meant to be political but perhaps they're worried that That the presidency may itself be in trouble because of all the investigations going on I'm not sure what that is that is speculation, of course from my side But just the argument that it's interest rates or inflation doesn't seem to Be able to explain this kind of a crack and you can see the futures are also down 61 So what I did was just look at some of the other asset classes because this is when you really need to go back a year Or maybe even three years and look at some other things and you can see that bonds have been coming down and and that is And that is to be expected and but suddenly if you know when you see the bonds up You know rising so when bonds rise that means interest rates Will fall but all through bonds have been falling which so that tells you there was already an Expectation of interest rates going up. In fact, interest rates were going up. That's why the bonds are coming down So this new surprise about interest rates really doesn't make a lot of sense Because it's already been being priced into the market for at least up, you know The last two or three months you can see that it's been In fact, it's been coming down from even from, you know, this level So even for the past six months There's been some sort of an expectation of rising interest rates And so this is not making a lot of sense and now suddenly the bonds are starting to go up So now you can see that now if this may be acting as a safe haven now Especially if interest rates are going up then money might pull it to the US bond market because of the Because of because investors will get a higher interest rates And so it's starting to move up. However, this once again does not Go very well with the rising interest rate expectation if bonds are going up So that's one thing that you notice The next thing I want to look at is the dollar index, which is the dollar DXY and The dollar index has been the dollar has been coming down for quite a bit Now suddenly it's starting to go up just like the bonds and that would be expected if money is expected to come Into the bond markets now why would it come into the bond markets one is expectation of higher interest and do perhaps There is a safe haven element coming into the bond markets And if that's the case then US dollar will go up. Let's look at gold as well So gold futures slash GC and you should see that gold would be moving up It will move exactly out, you know as as against the US dollar So if the US dollar is coming down then gold will go up now You can see there's a little bit of choppiness here, but regardless This is a chart from bottom left to the top right on gold So all of these are saying that there is something bigger going on the just the interest rates and inflation doesn't seem to really cut it and now you can see the futures the Japanese market has opened already and now the European markets will open so but you can see the futures are down about 68 in fact it just went down another 10 points and So there's definitely something in the markets and we just have to watch and if you're playing the options market You have to be very very careful because now if you can look at the SPX options Let's go to SPX and what I want to do is going to the analyze and if you look at the options even the two-day options Which expires this Wednesday the plus or minus is a hundred and twenty five And you can also see that the bid ask spread is just you know incredible 62 dollars and 72 dollars for an add the money option And so this is not the time to be playing the SPX if you do want to play You know, it has to be a spread a $5 spread and you know things like that But if you're going to sell because the premiums are so high The selling premium might look like a very attractive Attractive proposition and it could be but you have to make sure that you do it as a spread and you have to and I would do it on the call side because If the markets go up then the volatility will come down and so the Vega effect will be adding to your options positions So that's something that you can do. That's probably the only safe trade But in in markets like this It's best to just stay out and just let some clarity come in and see how things go on from here. Thanks