The market opened this morning like a routine trading day that we've seen throughout this rally with some nice green across the board on low volume and low volatility. That changed after about an hour and a half into trading, however. By the end of the day, the Dow had lost 300 points from its morning high, and the VIX volatility index had one of its largest one-day spikes ever.
Below we highlight charts of some of the significant moves that we saw today. The S&P 500 declined more than 1% in the final hour of trading, and this last hour selloff broke the bottom of the sideways range the index had been in over the last month or so. At this point, the S&P's 50-day moving average is acting as a magnet, and we wouldn't be surprised to see a test by tomorrow.
We mentioned the huge spike in the VIX earlier, but below is a chart that shows just how extreme it was. While the VIX is still not as high as it was during the Fiscal Cliff spike, in percentage terms, today's move outpaced anything we saw in the final days of 2012.
The drop in stocks coincided with big rotation back into Treasuries. We saw a huge move higher in the 10-Year T-Note today, leaving its yield at 1.86% and below support at its 50-day moving average.
Finally, the dollar saw big buying today as investors exited "riskier" currencies like the euro. As shown below, today's move pushed the US Dollar index above key resistance that formed last November.
We'll know more in a few days whether today marked a key shift out of stocks and into the safer plays that's going to last a few weeks or months. Days like today have a tendency to shift the equilibrium of the markets, but it's not always the case.