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Investors Fear
Besides taking profit, one other reason on sell off is fear, investors fear, traders fear, or market fear. In US stock market, VIX is a symbol for the Chicago Board Options Exchange (CBOE) in measuring volatility or market fear for options. In this case, this refer to a wide range of options on the S&P 500 Index.
Picture Worth a Thousand Words
Many of the answer are already in the additional lines and comments on the chart. See chart for more information.
CBOE VIX and Stock-Market
Although there are other factors, in most cases, a high VIX reflects increased investor fear and a low VIX suggests complacency. When VIX spikes high, traders in fear, the traders and investors panic and taking profits, while VIX decrease, the traders and investors relax and traders and investors hold their stocks. See the corresponding of the spikes between S&P 500 and VIX.
See chart for details.
Standard and Poor’s 500 and Volatility Index
August 19, 2015 S&P 500 and VIX
The Market Fear
Now in Asia market, trust the China SSE Composite Index is like VIX for other markets. Why? When China SSE fears, fail to travel north, everyone follow.
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Moses
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