The following is the 5-day chart of the implied volatility of the S&P 500 index:
Trying to predict this in advance is very difficult and one reason why I generally do not believe people that say “I bought at 25 and sold at 40”. Trading is never that clean – you never know when the bottom will be, and you never know when the top will be. You only have a fuzzy idea whether something has been over-extended, but you never know whether you are correct or whether you will get the timing right.
Everybody is a perfect trader in retrospect.
Most of my portfolio losses from the previous week have reversed today. If I was going to guess, there will be another spike or two of volatility as traders test the waters, but I think this is it for the short term (i.e. back to “business as usual”). In the medium term, I would be very, very cautious. Markets tend to gyrate significantly in economic stagnant periods.
Other than using the spike down to liquidate some US currency into Canadian, and making a very minor trade (using some idle cash that has accumulated in the RRSP account), I’ve been twiddling my financial thumbs. The worst trades you can make are ones where you are forced, or trade for the sake of trading.