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Volatility Swept Across U.S. Equities Late Summer 2011

December 12, 2012

During the second week of August 2011, the Dow Jones Industrial Average plummeted hundreds of points and VIX volatility indexes reached alarming highs, but liquidity retained its strength during lessened but still strong trade volume. There was little difficulty filling clients’ orders.

Robert Karofsky, global head of equity trading for AllianceBernstein, was quoted in the August 11, 2011, Traders Magazine Online News with the observation that, while the markets’ price action was unnerving, they “are absolutely functioning efficiently.” Karofsky continued to note that the lack of delays and disruptions was a positive indication.

Further explaining, Karofsky pointed out that when a large burden presents in the system, increased correlation occurs in the marketplace because stocks move together, and therefore investors were being particularly drawn to exchange traded funds (ETFs). Karofsky recognized that normally ETFs are about 30 to 35 percent of trading’s daily volume, but recently that number had grown to approximately 40 to 50 percent.


From → Robert Karofsky

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