I’ll keep this short because I didn’t trade today…

The market got hit hard in the last hour on continued fear about European problems, and who can blame investors for selling now and asking questions later.

The Euro fell about 2 full cents against the US Dollar, which is a very large move.  As long as the Euro is so volatile, the stock market will also remain a risky place to be.

It’s particularly interesting to note that gold was up about 1.5% today…something which over most of the past couple years has only happened on days when the US dollar was weak (because a weakening dollar means that the price of gold would drop in terms of foreign currency.  Since there are buyers at a particular number of Euros that means the price in dollar terms should go up if the USD gets weaker, all else being equal.  (The same applies to oil and most other commodities which trade primarily in dollars.)

For gold to be strong when the USD is strong is a very worrying sign.  It points to substantial fear of instability, fear of there being any decent financial safe haven.

You don’t want to be making a lot money in gold.  It’s like when you get a big check from your homeowner’s insurance policy: it means that something quite bad is happening (or has happened.)

I think the market will remain volatile for weeks.

For traders, looking for volatility spikes to sell out of the money options (both puts and calls) will probably be a good strategy, but it’s only for sophisticated traders who are willing to take risk.