Underestimating the correction

The VIX Volatility index shows the significance of the current correction. In the last couple of days the VIX Volatility (Fear) index has hit its highest level since the GFC - it has spiked to a peak of 53.29 but that is the highest since 2009. Whilst you can read a lot of commentators shouting hurrah at the first bounce they are surely too optimistic in their hopes that this is the end. Keen as they are to wave the “value” flag, in their inaction they are ignoring the significance of the change in trend. You cannot dismiss it so easily. But this is not about BUY or SELL it is about stock picking and we have cast our dice. Continue to avoid resources, commodities and anything to do with China. Prune cyclicals and US stocks. Sit it out in the banks and defensive income stocks. Expect the A$ to go down. Trade the bounce if you like.