I find it very interesting that trading in the Direxion 3x and -3x ETFs (which has been fast, furious and on huge volume) started on November 5th, at about the same time as this latest bout of extreme volatility. I'm talking about FAZ, TZA, ERY, BGZ, ERX, BGU, TNA, FAS.
BGU for example, the Russell 1000 big cap x3 (three times the daily return of the Russell 1000 index), traded 11 million shares yesterday after trading 19,000 shares on its first day of trading, November 5th!!!!! Daily volume increased by a factor of 600 in just 2 weeks. By the way its range yesterday was 22-30. Talk about adding nuclear fire to the fire. It is no coincidence that the long triple ETF was where all the action was yesterday, a treacherous day if there ever was one. It was all those people trying to catch THE bottom all day long who got flushed out in the end and might have turned a run of the mill bad day into another crashing disaster.
I would love to see a study on how much marginal volatility these little "weapons of mass destruction" have added to the market's volatility this week.
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