This year's market decline has several important characteristics compared to last year.
First, this year's decline was characterized by a sharp rise in the VIX (Volatility Index) last Monday, accompanied by large trading volumes. This phenomenon is called "capitulation" and is considered a big trading day that drains the market of pus. Capitulation refers to a temporary large drop in the market as investors sell a lot.
On the other hand, there was no capitulation during last summer's decline. This indicates that last year's market decline was not as sharp as this year's.
Furthermore, there have only been three times in the past 35 years when the VIX has risen to 65: during the Lehman Shock, the Corona Shock, and this time. This also shows how unusual this year's market decline has been.
Finally, last week's sharp decline may have led to the liquidation of leveraged, fleeing positions. This is expected to stabilize the market.
This year's market decline has several important characteristics, including the emergence of capitulation compared to last year and the abnormally high VIX, which will hopefully help drain the market and stabilize it going forward.
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