There wasn’t really anything worth linking to for jobs headlines today. There really wasn’t much worth looking at today in economic reports. This is a little odd given the fact that the S&P dropped over 4 percent. Last week I mentioned that there were as many technical reasons to expect a continued rally as there were to expect a reversal soon. The one thing I felt was certain was increased volatility. I didn’t make my volatility trade (the particular pattern I was looking for didn’t develop). Yet, the market didn’t disappoint. The VIX took a rather noticeable jump today. I believe that volatility will increase. While it’s not certain whether the moves will be large up or down, volatility is correlated with down markets (so I expect more down than up). I’m a little surprised, I thought that we’d have to wait until May before things really started shaking up.

Something to look forward to: The Bank of International Settlements, sort of the central banks of central banks, tracks various statistics. Of particular interest is the size of the Over-The-Counter derivatives market. The notional value went from 595 trillion dollars in December of 2007 to 683 trillion dollars in June 2008 (this is an order of magnitude larger than all stock market values combined). It appears as if we can expect the data for December 2008 in June of this year. I am curious to see how much the market shrunk. It will provide a good idea of how much pain has already been experienced vs. how much remains. I suspect that there is still a lot of deleveraging left in the financial system that needs to take place. Incidentally, if the OTC derivatives market grew, we’re really screwed.