tage, all of taylor swift's music videos, interviews, and more. xfinity is the destination for all things taylor swift. alix: timeout steel -- i am alix steel. joe: welcome back. ge plunged at one point about 21%. the biggest selloff since the 1980's. not a stock you thought would have moved this much. when you see a company like ge lose 50 billion in market cap , that created extraordinary market action. i want to check out this chart in my terminal. beenurrency stuff has

wild. we see external volatility in the dollar versus yen. one of the highest ranges in years that we have seen. for stocks, that is obviously everyone saw that they but what we saw on currencies was absolutely wild. take a look into my bloomberg terminal and look at the forward curve for cover in the u.s.. can see here that the market is ofcing in another decline $2.23, and then commodities rebound. if they are relieved the leading indicator, this forward curve could spell doom. let's take a look at currencies, because the market rally driving

down. one of the biggest unknowns that are spooking investors? for more we have our investment analyst joining us from san francisco. what did you make of this currency slides that joe spoke about? >> in essence, what we're seeing thoseis positioning for participants that have been in for a medium-term horizon. -- where weve me slightlyeach with shower pockets. volatility is understandable,

but given the circumstances not entirely unsurprising. joe: can one of the stories beyond the dollar action today be the carnage in emerging markets are currencies? toultimately, it comes down anyone wanting positioning. risk on will risk off in markets. it comes down to how heavily, a lot of that has been to a large degree, in my mind, done. now the movement comes along for the more central camp. scenario?his a 1998

my bloombergt terminal, you were looking at the currency market index. if we want of having another selloff late june 1999, you see another 52% decline. what do you think? >> iris was just pointed out, we have an unwinding of religion. unwinding of leveraged position. if you can do that in the market, anybody who has had position, the euro has been .riting relentlessly people are reducing positions as volatility comes in. we have seen them breed complacency. gone toave been

positions that are nice and are risky.k, but is but in emergency markets, they are tarnished and have the weaker players. china has gotten a lot of heat of one of the better as volatility. you mentioned the euro rallying relentlessly against the dollar. typically and it had a qc people wanting to grab dollars because of a are safe and went and had it so intense that they just grab dollars regardless of what they think the fed is going to do? >> and is a mess. what has been happening is that the dollar has been rising, and it is in a risk on environment. the stock market has been writing up over the last year.

these correlations are not stable. the inflations are too high and not only the most obvious ones. it is a tough lesson to learn, you say,espite what people have they were safe, shorting the euro. like a lot of currencies of ezekiel to the woodshed. if you take a look at my bloomberg terminal, i looking at the u.s. dollar versus the south african. gold has been holding up very well. one of the reasons why they should be getting that hurt? >> the state of the underlying economy is less than stellar. comments are central-bank this afternoon for example, saying they were contemplating what both.be prepared

while today's lamarcus extreme on the back of further unwinding and whatnot, will come to you soon enough where we will settle .nd fundamentalists joe: what will forward to tell you that the trend we are looking at lately will reverse itself? everybody is clamoring about volatility and the like thereof. obviously, there is phase one. a little bit. it will take a few more days, just to see how the market reacts to the first signs of the u.s. dollar. make it so may not

-- >> what components are you going to be looking for when you get up tomorrow morning? what is the biggest indicator? tothe reason this is going play out differently is because the markets are going to act differently. people are going to look at the glass half-empty, and the start working is going to take weeks to adjust. it is going to be some back and forth on the red i think that because he volatility is going to persist and even for the coming days and that we will see more of what we see right now. it is going to be the are places that are going to gain.

going to continue to do well in the medium-term. joe: fascinating stuff. thank you. alix: we will be right back. ♪

alix: i alix steel. joe: the s&p 500 has sank into correction territory all day on bloomberg television. ofx: we have heard from some the best voices on the global equity selloff. take a listen. >> i would not be a fire today. >> this is a short-term, painful correction. >> i think people had a genuine hard time sleeping last night . >> they vertical down like this

is not something you want to step in front of. >> this has a curve at the beginning, this is something that is very wrong. wante fundamentals do not this. these rapid moves and prices are not matched by changes in the underlying intrinsic value of the businesses themselves. >> the banks have been pumping values,prices, equity you can pushing them up high enough until they get into very thin air, they are bound to correct. >> to correction is healthy, but it is a correction nevertheless. >> we were due for one. >> it is not without precedent, because it is the kind of thing that the markets go through. >> unless you believe that the chinese economy is so bad that it will pull the global economy into another recession, i do not think it is likely will see a

20% correction on the s&p 500. >> is more of a buying opportunity for us than anything else. wonder whether they still have money, or they have to use leverage. big balance sheets, you need resilience. you need well-managed areas, and you need to be a forward looking industry, not a backward looking industry. there is a lot of value being created, and we created over the next few days. joe: you just saw our next guest, this fellow said it is no surprise to him. doug ramsey is joining us. he says it could reach 20%. what is going through the minds of investors after today? >> it was a crazy day.

i think, given the experiences that we have over the last five or six years, we are preparing to buy another dip. that has been awarded time and again now, and i do believe they're getting ready to do it again. i would not be surprised if we they saye bounce were it's good to do. i would be a seller in any meaningful bounce. ust might be a catalyst for to get to maximum defensive posture. we're almost there right now. we have a little bit of powder where we could reduce our equity .xposure even further alix: you are forecasting that the fall in the s&p could reach 20%. take a look at my bloomberg terminal. this is the number of stocks in the new york stock exchange that have hit new 52-week lows and this is just as of friday, 601.

what does that tell you? >> what we had keyed on prior to the last few days was the until youad this collapse that had a very large number of stocks making new highs and lows simultaneously. that historically has been a bearish condition for the stock market. a just means that there is lot of bifurcation under the surface. techs, untilbio very recently when the commodity oriented stocks were where we love. warning, someof a of the chelating groups like transportation, utilities, and then going back to 14 months ago, we had a key in high-yield credit.

we have had some cases of extend more than a year. the idea that we would i after a mere 10 sent traction, it is premature. joe: are there some areas of the market that you might be looking at, areas where you expect to find bargains? >> i think there will be a , first weses right will see a traditional flight into economically defensive areas. care, at least a relative basis, we think it will have one , and your classic sectors will do well. the first half of what is to come, and i talked about and i do not expect a 31 bear market

-- 30 11 bear market that we had in 2002. i think is whole thing could come to a head in the next couple of months. i think it is when you start to see a transition into the groups that have been left behind, what the energy, materials, and industrial cyclical, that'll be a sign that things are getting pretty late, when those emerge. alix: what will be the catalyst for that bit? think ofk we tend to stock market lows being made fun .f exhaustion it will be an exhaustion of values in those areas. but i think that will be the last face of it, where he see the flick judge the strength of

.hose things that i got alix: thank you for your perspective. as we go to break, the dow closed down 588 points. but it does not make the list for one of the worst five days in dow history. here they are. ♪

alix: i am alix steel. throughout the show we have been discussing the fundamentals behind the global market selloff. but what about the technical?

joining us to break everything down is the chief technical strategists avi j. thank you for joining us. >> it was very wild. since augustrst 18, 2011. it is appropriate that we are wearing red today. three massive down days, and the bad news is that it represents a lot of momentum. the p5 hundred have been range bound, and we thought federal pickup would start in a few days. panic selling is unsustainable. joe: how do you distinguish between a day is selling ?nything and excel and they are across the board. it is very top-down. it is not about the companies,

china, you name it. the magnitude of the decline, and the volume. when you see a close look we did last friday and will for his -- and you will see the volatility. alix: if you take a look inside my bloomberg terminal, here is the percentage of stocks that are above their 50 day moving average. tell us what this chart means to you. >> market participation. when you see the number contract it means less stocks are above their 50 day moving averages. that shows more and more stocks are moving momentum. you would not think that is a

good thing, and it has not been a good thing for the market. but there is a point at which these measures become oversold or overdone on the downside. i think we're pretty much at that point. themlatest where you see above their 50 day, that is when you get a bit oversold. we are at that point. what do you say to the critics of what you are doing? ? i would agree that it is not a great indicator. it is often out of line with the broader market direction. these dreamsou get than it really sends a message markets tend to help you lows when they are occurring.

it has done nothing, actually. a look at my bloomberg terminal and i will show you a five-year chart of the s&p. where is the next support level, and what does this tell you? sliced through a couple of support levels with this decline. i would wait for consecutive weekly closes the low important levels to confirm breakdown. these shootouts can be. accounts. to me we're not necessarily seen a confirmed yet, because the level i'm watching is about 19 or 40 for the national cap index and that would preserve the trend that started last october. joe: why would the number straightened out for you? it is based on these

fibonacci ratios, and that lowe was about $18.20, versus the low end verse the high in the s&p .00 to prevent additional downside risk to the $18.20 level. alix: we are just from asia opening. as we take a look at the saint-positive -- the shanghai composite, one of things we are needing to do? nature of the target. we have already seen a prolonged correction. now we are seeing cap's. they were more exhausted than others.

you can argue for the shanghai composite that it is any long-term correction based on word is compared to the higher highs and lower lows. i think it is around 3000 with the level that i was watching. i cannot be sure of the exact number. these things happen quickly these days. me would rather have it with new.e he went rejoining the perspective. joe: thank you for watching. alix: we'll see you tomorrow.

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♪ john: happy national waffle day, sports fans. the washington post reports that vice president biden is inviting major democratic fundraisers to his home after labor day to talk about the big 2016 question. he also met with elizabeth warren over the weekend.