Corrections Aren’t Always a Harbinger of Doom: Taking Stock
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After one of the worst weeks for European equity markets this year, there’s one question on everybody’s minds: was this a short-term correction or the start of a major sell-off? The sell-side seem to be relatively bullish, while the buy-side is cautious. Looking at the overall picture, it doesn’t look too bad.
Volatility might have spiked, but there’s no sign of panic yet. The Euro Stoxx 50’s volatility index jumped to just above 20. Similar surges have often been followed by bounces. And as we mentioned last week, traders seemed better prepared for a drop this time, with the put-call ratio reaching a peak of 3.4 on Sept. 24, showing market operators have built protection against a pullback.