good in every time the market rallied, the last six months we see it rally, we're not seeing that we're seeing lower lows, higher his, something we haven't seen in the stock market for quite some time. >> this has been an mazing day, bill and kelly, because we were off out of the gate and down sharply. then came back nasdaq was positive very briefly during the session the dow almost was, as i recall. and nowwe're heading for what looks like it could be an 800-point decline. kelly, bill? >> i think i hear their mikes. >> i hear you now. there we go. >> we're getting our act together as we watch this selloff. >> that's quite all right. >> thank you, guys. >> the market, we're down 2% on friday one of the biggest point declines we've ever seen today is worse it's rare you see a back-to-back drop in the market like this you add it up, we're only talking 5%, retracing the

extraordinary upside moves we saw this year but now the action is just as extraordinary on the downside as what we saw moving higher since we turned the calendar. >> this is when we start to dust off the old adages down is quicker typically than the up markets we've had all a rise, we don't have to remind you of that, but the we have to pay the piper and the dow is down -- >> by the way, you can't compare the percentage terms down 802 on the dow. biggest point decline prior to this was 776 during the financial crisis now, back then it was 7%, 8% drop today we're talking 3% it's rare to see that kind of move we'll show you everything going on with the spiking volatility. >> it's unsettling because it happens all at once. we'll bring mike santoli in in a little bit we were talking about how the market has changed in 2018 compared to what we saw the last couple of years. where most days the move higher would be a small one

we were hitting base hits or doubles or something now we've been hitting home runs both up and down boy, are we hitting them today as well. >> we crashed through these on the upside all year. dow 25k, now retracing back to the downside. >> it's all about market psychology and it is changing as we see bob pisani is on the floor with more on today's selloff. >> i think what's important about what we're seeing today is there's no big macro event, no big news item driving this much of this is technically driven i want to show you a chart of the s&p 500 with highlights of the day. show you what i'm talking about. so, we actually hit our lows at the open there it was 2730 something at the open 2733, perhaps. we had a modest rally after the open but it was on very light volume buyers were not enthusiastic even though the market was rising they ran out of steam around 11:00 and the market started drifting south we passed the earlier lows about

12:20. there was another spate of volume activity going on in other words, people noticed that and sold into it. briefly it stopped, we rose. that rally was very, very light in volume. again, the buyers are not enthusiastic again, they ran out of steam and we hit another new low a little while ago. a brief rally on very light volume you see what's going on. these are all technically driven we hit the 50-day moving average and another new low. we're still searching for a bottom here. the volume on the upside is not as great as the volume on the downside selling is not yet exhausted and the buyers are still not enthusiastic now we're starting to talk about the possibility of retail investors getting involved you see the s&p 500. the average price for the s&p 500, the average person has paid this year, 2787. it's the volume weighted average price. that's much higher than the market now the average person who bought is under water by 2%, 3%. the question is, most of the selling's been professionally

driven now will we start see retail side come in and start selling those etfs remember, historic numbers of volume came in on etfs in january. we never saw numbers like that the retail investor was in big now they're in for a month and down 2% or 3%. how will they react? guys, i want to emphasize. there's nothing here there is some inflation risk there is some valuation risk and there is some political risk about what's going on in washington in is not happening on nothing, but today a lot is driven by technical factors. back to you. >> you know, the guys last hour were talking about if this felt like a climactic bottom. we don't know until it's over typically, but take a look at the vix. we've hit 309 just now, bob. i mean, we have toll think about those levels we identify where there's a yellow flag or a red flag this is a very, very dramatic move here. we've seen this before, but you

wonder what it's going to mean when all is said and done. >> as the market moves down quickly, the vix measures the cost of buying puts. as you go further down, you get further what used to be out of the money puts the price for those puts goes way up all of a sudden of course, we're measuring volatility as well and that's what powers the vix right now. we're getting into strike levels that were well below the market a few days off. >> thank you, bob. mike santoli is here it's a good reminder how much we stretch the rubber band. by the way, we're down 875 now on the flash crash day, what were we talking about with the dow? >> this is basically a volatility shock this is -- you're probably going to get a mini crash between what happened last week and today and this is -- this is not people at home panicking this is bloodless mechanical selling by trapped large investors. >> early in the day we were identifying levels, the 50-day

moving average and so forth, that needed to be retested, we kept hearing if it falls through that, we have to find a new level these traders are looking for a level where it will hold and catch a bid, right >> exactly also with the vix basically levitating the way it is and the market continuing, you're clearly seeing -- those are two sides of the same effect, which is you have to reduce risk, get down your equity exposures what's interesting about this whole thing, yes, we were overdue for something kind of nasty. some kind of a pullback. yes, it's always more dramatic in the moment than it seems on paper when you're saying, hey, we could use a pullback. this is a little more than you would have expected. and what's fascinating today is it's teelgtsly an equity event credit markets are not freaking out. bond yields are gently lower the dollar is barely bouncing. >> put the dow back on the screen down 949 >> they were so captivated with the upside and now this rapid

unwind happening. >> that's something dom pointed out. where are we going all going to cash? >> right away you're getting it out of the market. >> gold is up a little bit they're not buying oil just going to cash right now >> which doesn't say it's going to last forever. doesn't mean it's the end of the bull market. just means you have this little bit of a shock and there's this knock-on effect with mechanical selling going on there's clearly what's happening. no news happened >> wow we are down 1,000 points on the dow jones industrial average that's a 4% drop 1 sthou points is not what it was. it's still pretty big. when you're down 4% in one day here it's not often you see a market of that magnitude. as mike just said it's not necessarily playing out across other asset classes at the interest rate is moving higher, as we talked about one reason stocks are upset that's moving the other way. dow down 1,068 right now. >> what are the circuit breakers. >> 7%, i believe >> 7%. all right. art cashin here. he has no microphone what were you going to say

[ inaudible >> yes, broke the 50 >> again, arthur is pointing out when it broke the 50-day moving average, that's when we saw the acceleration in selling. bob, all the traders on the floor are big chart watchers when they see certain levels of expectation breached, that's when they act and that's what they're doing right now. >> i know. and we did break the 50-day moving average, 2717 that was a little earlier in the hour a little after 2:00 eastern time mike has it right. this is blind mechanical selling. you're getting strike prices way out of the money for puts just a week ago that's what powers the vix here. the prices of these puts when you get further out, prices get more expensive

>> almost to 1100 points. >> right as bob knows, one of the kind of bear arguments for a while is big investors got very comfortable selling volatility when you compressed a lot of elements of the market -- obviously, this is the backlash to that. >> the biggest intraday drop for the do you one reason you keep talking about the 50-day moving average is starting the year we went so high above those levels. the s&p 500 was 7% above the 50-day, 14% above the 100-day moving average that's the kind of extreme momentum we started the year with now we're talking about falling back down to those we're down 4.5%, 1137 points is that where it rests or does it have to go past that level? >> it's unclear if it's about technical levels, if it's just an exhaustion of this selling. whoever clearly has to sell -- >> almost 1300 points. >> the gains for the year are gone for the moment.

essentially the s&p 500 -- >> we're negative for sure. >> slightly negative year-to-date at this point. >> by the way, only 11 years in history have not traded negative on year-to-date basis before this we started -- when we started maybe ten minutes ago the dow was still slightly positive for the year now just in the last ten minutes we are suddenly down 2% for the year with this 5% selloff do you want to go to leslie here i know she's been tallying up some of the damage, but i know - >> numbers are getting old fast. >> it's changing by the second here, leslie put things in perspective for us. >> that's exactly right. the s&p 500 has lost $1 trillion in market cap in february. this in just its third trading session of the month that number continues to climb lagging this month, amd down 17%. chesapeake down 13.5%. tractor supply down 13%. and arconic down 12% back over to you guys.

>> leslie, thank you the dow jones industrial average currently down just under 1600 points the selling pressure has really picked up just in the last hour here we only started off down a couple hundred we had a big selloff on friday that began a lot of this action. one of the old saws is markets don't bottom on a friday. >> so, let's identify what's going on here. chances are people are getting calls if they are on on margin if they've borrowed money to buy stocks they may be getting calls or anticipating a call and they're starting - >> that's the old way to think about it i'm more worried about larger investors who have a lot of implicit leverage in whatever they're holding and they hold multiple asset classes and it's basically premised on volatility staying low. we overshot to the upside as

everybody was talking about. this is clearly on a short-term basis an overshoot. >> can you tell us -- we're almost down 6% on the market in one day. we would probably have to go back to the financial crisis those are probably 7% to 8% moves. >> that's right. >> when people look at their port 230e8 yoes with flashbacks to that moment to say, i don't want to stick around, how contextualized for us? >> you also go back to some late '90s, '97, '98 as i was saying before, those were macro shocks. those were credit markets throwing huge tantrums those were fundamental mismatch. right now it's very hard to find what exactly the stock market is reacting to except for its own weakness and it's feeding upon itself right now as we've been saying, the fact that after january you had investors big and small very aggressively overexposed to stocks by a lot of measures and very bullish about the future. >> your eyes don't deceive you

if you're joining us right now, that's the dow jones industrial average, down nearly 1300 points at lows we were down briefly 1600 that's about a 5% to 6% move in the absolute -- you have to, of course, add friday's trading action to this for all people calling for a 10% correction, we could sew one play out here in a couple of trading sessions. >> let's bring in a couple of market pros -- dom chu, what do you have for us here >> i just want to weigh in on some of the conversation you guys have been having because between bob and mike they hit on another huge salient point in this market. one thing to look towards -- you heard both of them mention this idea of protection in the marketplace. one of the things we're seeing in this market right now is the most liquidly traded exchange traded fund out there which is the spdr etf it was five or ten minutes ago i looked at the trading volume we traded 560 million of that exchange-traded fund over the normal 30 days we trade

90 million and that's elevated over the last 30, 60, 90 days or so another point being brought across by traders, this downside move is be asser baited for people looking for downside insurance. that is to say if you were to buy downside insurance in this marketplace and somebody was to sell you that insurance, they would then need to turn around from their own perspective and short stocks, short the market in some, way, shape or form to hedge themselves against selling you that insurance to begin with so, much of that is playing out in terms of the trading volumes that we're seeing. that might explain some of the reason why we are seeing a vast pickup in some of these exchange-traded funds that attract bigger sector moves. like with these spdr utilities, spdr technology, spdr etf. those that trade on a liquid basis are seeing much more trading action because there's more derivative action on the heels of that. that's something some traders are watching right ow, guys. >> dom, thank you.

we're looking at the dow down 1100 points today. that's about 4.4%. we have 45 minutes left to go in the trading session. at some point on the s&p, if we were down 7%, the circuit breakers would kick in and halt trading. we see that in individual parts of the market. we're not at those levels just yet. >> almost. >> we were close the dow was down about 6%. we have not reached those levels just yet again, these are probably the biggest one-day declines we've seen in about a decade. >> let's bring in a couple of veterans of the market watchers, rich bernstein from richard bernstein advisers and fred lane from lane generation of raymond james joining us right now rich, what do you make of -- this is pretty dramatic today, obviously. >> well, bill, volatility is always unsettles i don't care if you're a hedge fund manager or long-only manager or someone worried about your 401(k), nobody likes volatility it can be very, very scary the key thing that i think people should keep in mind here is that the market moves a lot

very quickly it doesn't mean fundamentals are changing that quickly. and even in -- as you guys have been talking with us over the last 15 minutes, you've mentioned technicals, you mentioned psychology, you've mentioned sentiment. but you haven't mentioned fundamentals and i think the fundamental backdrop is really what investors as opposed to traders -- investors should be focusing on the fundamentals it's somewhat healthy. >> richard, the reason why you haven't heard a lot about it is exactly to that point. has anything changed fundamentally? now, there's a couple things people could point o they could say, look, we're having a little inflation scare. interest rates went from 2.4% to 2.9% overnight i've heard the theory floated, these are markets testing the new fed chair to see what his reaction will be to periods of market turmoil the fundamentals, the question for you, have they actually changed? >> even as the market is coming back in a big way right now. >> qul, i thiwell, if i can anst

question look, we have been positioned for a late cycle environment for more than a year i think what you're seeing is the recalibration among investors that we actually are in a late cycle environment. kelly, the things you just discussed are things people said were impossible. people were saying inflation will never come back individual investors were looking for income, income, income nothing related to inflation at all despite the fact we were in a late cycle environment and inflation expectations have been rising since june of '16. this is nothing new. it's been going on the fundamentals have been changing through time, of course, but to think they all of of a sudden just changed in the last 30 minutes or two days, that's just not true >> fred, i know your infli nation is to be bullish in this market, but this selloff has to give you pause today >> for most people this is the first cold snap after a very mild fall and winter you walk outside and you go, oh, my god, i can't believe how cold it is.

i think it's fabulous. okay, we finally have a confluence of factors. we have growing earnings if you look at s&p 500 earnings for those who have announced, they're 17% higher than they were last year and the forecast going forward is very strong and we're surprised about inflation in a strong economy? we want inflation. that's what the fed worries about. where's the inflation. now we have some inflation we have strong earnings. and, best of all, we have stocks on sale. now we can buy things. >> that's the question, fred what are you buying? give people some advice who may be feeling, okay, i -- >> i always buy -- >> i'm trying to - >> kelly, you know i have 15 stocks in a growth portfolio i always buy the same things, the same sectors, within limits. we have aerospace, defense, technology, mobility, health care we like to buy stocks that have secular growth tailwinds because

we believe in the long run they will always outperform the rest of the market. that's what we believe. >> stand by right there. let's bring in jim cramer, who hasn't had much time to celebrate his eagles victory in the super bowl, but now you got to buckle down here and tell us what you're thinking as you watch this very dramatic -- not only the decline, jim, we were down 1500, 1600 points on the dow and now back a big way, down 900 points what's going on here >> it feels like a pats crash, a flash crash. it's a pats crash. patriots >> we got that we got that. >> i mean, honestly. >> that was mean there was like a hail mary, gronk dropped it and you lose 600 points the last 600 points are about as phoney as they come. even if you wanted to try to buy something, you wouldn't be able to you could put a bid in if we hit that level again, people are going to say, wait a second, down 4%, 5%.

i've been listening to the guests, a lot of stuff that got interesting that wasn'tle interesting on thursday. markets do get dheeper as they go down. there are issues, obviously, but we talk endlessly about how the ten-year, the interest rates went up. can welook at them for a second they're going down we talk constantly about how the market is overvalued it may have been overvalued on wednesday but there are things now that resident overvalued we have a situation like wells father goe that's so powerful, it can pull every bank stock down by the way, it is amazing the federal reserve basically woke up and said, hey, you know, largest domestic bank, boom, let's cut their earnings let's take their earnings. >> no growth allowed. >> we'll probably revisit this pats crash again remember, it's done on no volume it's done because of machines. nobody has time to think to buy. someone obviously screwed up and put in a big sell order and it goes down like that. we should get used to that because we were up a lot on a percentage basis let's not forget the markets showed the same lack of class

and power and honesty and truth we have seen in every one of these flash crashes. it's not different the market got phoney again. it's a shame can't handle the volume and can't handle this level of selling. opportunities come when the market breaks. and the market just broke again. we haven't seen it break in a long time. >> jim, let's look at the volatility vix above 30 - >> that's phoney, too. that's phoney. >> do you see them going hand in hand explain to people -- >> i see idiots coming in and selling. i see it's too fast to buy there's a lot of stuff that's come up too much, absolutely there are stocks literally back to you know, you could say, it happened so quickly that it's hard to even think, wait a second, is that price real maybe i want to buy procter & gamble at 80 bucks but you can't because it's some machine hitting it down. you can't get your orders in on time

it's the same crummy doesn't work market. you know, when you have the speed of light we sit there, we're mesmerized, we think something's wrong remember the flash crash a couple years ago another flash crash a few years ago. when the market can't handle this kind of trading, you get this don't freak out. look for something you like to buy. just do that. >> netflix down 10%. google down 10%. the energy sector is - >> google screwed up on the quarter. if they don't start caring about the eps -- my trust owns it. i lost faith in those guys big time i do think amazon, i have not lost faith in. you want to buy strength, not weakness that's down you can't buy a company that missed on the quarter and then doesn't seem to care i mean, you know, alphabet, they're like, hey, you know, we're great. i don't want to go where, hey, we're great. i'm looking for a striving company that does well not someone resting on their laurels saying, stop it, we're fantastic. that's not what we're looking

for. >> jim, hang there if you can. >> i'm not going anywhere. >> all right i want to bring steve liesman in here i'm reminded it was back in the fall of 198 7b when a guy named greenspan had just taken over the fed and we had a crash at that time and he was still cutting his teeth and figuring out where the men's room was in the federal reserve building as fate would have it with today's selloff, today is jay powell's first day - >> markets have a way of greeting you at the door with not necessarily a hand shake but the back of their hand this is the third time in a row -- i didn't look at greenspan's first day. the last three times we've done this, changed over to a fed chair's first day, it has been a negative day i don't know if that's what's going on here. i want to tell you there's a rethink right now in the fed funds market about what the federal reserve's going to do. first, i want to show you the march contract for the first rate hike has plunged along with

this market. we're down to 75% now, if we have that chart in the back, guys there it is. it was up near 90% we went down to 75, down off the lows on that what's more interesting is what the outlook now is for the second and third rate hikes. remember, we were talking about a fourth rate hike here. take a look now at what's happened we were talking about that next rate hike in june. that's now been pushed ahead for the 50% mark to august and december now down below 40%. that was trading up near 55, 60%. so the very thing that spooked the market, the market fell, it would appear anyway, and now they're beginning to dial that out, guys, this idea - >> this is crazy this is crazy on some level. let me - >> it's insane on every level. >> but this is what i'm saying jim, all right, if everything that we're talking about is that this is mechanical selling, why should it have anything to do with the federal reserve changing their plans about rate hikes if everything you're talking about is still intact and this is a necessary correction >> i think it is a necessary

correction i listened to steve. it's absolutely true if they're pushing it back, that could be good news is still good news as opposed to what we -- we translate good news into bad news on thursday and friday. i do want to point out the mechanics of the market. because they're scary. they shouldn't be. i the market dropped 800 points. why? because the market doesn't work well at certain points we can look back at the last couple times we had this velocity we recognized the market really failed to do its function. it's okay. these are machines they're not -- >> should that have anything to do with fed rate hikes >> we think they're not fallible they're totally fallible because they're programmed by people who don't know what the heck they're doing. it happens periodically. or algorithms rl wrong freaks people on out at home they think the asset class isn't for them the president identifies with the market with when are you going to start hearing, well, the president must be in trouble we can spin any tale we want

the market doesn't work at some points it didn't work 15 minutes ago. it freaked everybody out which is a shame because it's a disgrace to the asset glass. there's no governors in this thing. it's a disgrace. but that's what happens periodically. >> i want to point out the mechanics of how the economy works relative to the stock market and you get to a point where a downdraft in the stock market, it is thought, will have an impact on the economy and will have an impact on the fed's thinking when you start looking at rapid declines and big declines like this, it's just changing the market's belief about what the federal reserve's going to do. also, it's well to remember, we have had something of a wealth effect a lot of the stocks out there that have been doing very well have been benefiting from what's happening, a wealth effect from the consumer >> but, steve, we haven't even had our -- listen, we're talking about -- >> some comes off the top. >> we're barely back to january 1. >> i think january is gone it never happened now. >> january is gone guess what, all of 2017 is still in the books. >> fair enough

>> that's a pretty good wealth effect. >> think about the psychology of the consumer who issed already own going to spend what's thought to believe 5 cents of every dollar gained from the stock market if the idea that gain is permanent and will be there, they'll spend the whole nickel, otherwise they'll dial so will back that's the psychological effect. >> a fortune has been made in the market these are not even big percentages. we wiped out january we wiped it out in a flash because the market doesn't work well whenever i say the market doesn't work welling, it sounds like that's impossible we've seen it so often why should we even think it's an outlier. the market went up too fast. now the market comes down much faster and look, the market's made up of individual stocks let's pick united health it had a blowout quarter raised numbers, it's perfect, buyback, it's fantastic. well, it's down a lot. somebody might say, that's jeff bezos. he wrecked united health which is completely untrue

i'm saying we can craft and spin and say things but i'm tired of it. i'm tired of saying that a phoney market is real. what i'd rather say is, wow, big air pocket a lot of stupid sellers. it's done by machine look for opportunities you're getting some stocks at prices you shouldn't be able to get because the system doesn't work well. but we are in the media and we feel we have to describe what happened i'm telling you -- just like when i was here in the flash crash and everyone was saying it was greece i'm saying, it just doesn't work right now. you know, and it's now -- it just doesn't work at times do you think anything really happened 800 points ago? no, moron is board, another guy hits a thing we'll never find out what it is because we don't investigate the stuff. take it from the point of view, what stock did you like? you couldn't get it -- you couldn't get mcdonald's at $1.79. at 160 it's an interesting stock. it's a different stock at 160.

but it's very, very easy to try to ascribe actual facts to why we fell 800 points that's why i called it the pats crash because that's about as stupid a way to describe it as anything else we can come up with but it's okay. it's okay. >> let me ask you this you know this market better than anyone what do you think about what jim is saying here >> is this just machines gone wild >> no, it's not really machines gone wild. i think what you saw -- i put out several e-mails over the course of the day. it was a classic beginning we sold off on continuation from friday they circle the wagons, rallied back and i wrote an e-mail saying they're about to roll over, which is a classic retest. if they test the earlier low and hold, you'll produce a rally that could attract a crowd if they test and they fail, then you'll be testing new lows and you'll look at that. as that continued, then we got to the point where the s&p was coming down to test the 50-day

moving average it tested the 50-day moving average and held pretty well then it snapped like a twig and everybody said, whoa, this is more serious than i thought. and bids began to cancel people who were moving in to sell, were selling into a vacuum the bids were all gone the market started to look like it was getting out of control. as jim aptly notes, when the market begins to look like that, people raise fears all over. what is it it's a major event, it's an earthquake, it's a whatnot and the fear builds on itself and more bids cancel then you get that severe overtrade. you're down 1600 points on the dow. totally ridiculous and on only moderate volume because there were no bids >> amen! amen >> thank you now we have circled the wagons again and they're tlig to build it back up when you have this kind of action, it usually indicates you're going to have another day or two to try to find a bottom

because now it's like the patient had heart surgery. and now every day you're going to come in and he's going to want to know, am i strong enough to go to the front door? do i feel well enough to walk two blocks down? you'll see a market testing and retesting itself to build a bottom. >> i'm reminded that this is the time when people start to say the stocks are trading like commodities now. right now they're just watching these levels i know fundamentals matter but not right this moment. they're just searching for ee qua lib rum. >> they traded like commodity levels on the way up i spoke to - >> i did. >> very few felt their stocks deserved where they were a lot of executives said, we've been carried up by the s&p 500 we wipe out that art's just so right. the sellers, they didn't know what to do because they're busy pressing buttons and not really human. they're programmed like you take

a calculus class and the buyers get scared, drop back. next time the buyers will be more emboldened and say, i can't believe i'll get amazon below where it reported that great quarter. if skyworks solutions reports a fabulous number, people will say, the world isn't over for apple. i want to say when we have these big downdrafts, art is right, we can try to come up with an analysis for it, or what we should say and, be honest, is that the machines really at certain inflexion points don't work well. when we sit back at this level six months from now, we'll say hey, you know what, i think the machines didn't work well. i'd just rather say it now than be an it's yot and say you know what this is this is j. powell saying to this person or that person, wow, i'm scared yes, it's true you can look at the fed fund rate future maybe they've changed. i look at that board of red and say, are all those companies doing as poorly as that red wall indicates? well, they're not doing as

poorly as that shows but not working as well as it shows when it's green find something you like and put a price on it. when the moron traders hit it, that's how you make money. that is how you make money in the market not chasing and saying, wow, it's up six, now up ten. look at the board, find something you like don't walk away. it's your game plan. stick to your game plan. but if you take heart and say, you know what, we were down 1600 because something was really wrong, i think it should go to cash because you're just not ready for this you are not ready for prime time >> you got any juice left for "matt "mad money" tonight? >> i got plenty. this pats crash. this is totally brady not being able to deliver with 1:05 and no time-outs. that's because the eagles had a good game plan they stuck with it unlike the morons who sold down 1600 who were thinking, is that really the price i got did i really sell edwards life

sciences, i like that because of the analysis of the open heart surgery,dy really sell that stock down that much did i sell it at 126 maybe if it gets there, i'll buy it back. i can pick any stock in the market it's a shame it happens like this. >> well, we'll let you go and get ready. thank you for joining us. >> i'm thrilled to come on i do like to point out when the market doesn't work because most people don't want to admit it doesn't work i'm way too old. i'm as old as the person who never got to see a championship until yesterday. and i'm thrilled thank you, coach pederson. thank you, howie roseman thank you, mr. lurie >> fly, cramer, fly. >> thank you. >> thank you >> let me underscore what jim said with an anecdote. john d. rockefeller when his sister was interviewed as to how was he so successful shell said, whenever it was raining money, he always had his ball turned the right side up. that's just to jim's point, the

viewer shus take a look at the stocks they're interested in and put your bowl out there at some price and money will fall into it >> mike, you've been dying - >> no, no, no. really just to add onto everything that's being said, without a doubt the market buckled under stress of its own making that's what i was pointing out, it wasn't reacting to stress in the credit markets or something macro. let's continue on with football analogies. i wonder if the market after a day like this has to go through the concussion protocol. you had your bell rung - >> this isn't over we're still down 800 points. more than 3%. >> less than two weeks ago was the first time in 100 trading sessions we were down more than 0.6 of 1%. >> it was notable then. >> so, you had everything wound so tight, it got unleashed nobody's buying put options at a vix of 30 because they love the idea because it seems like a great treated right now. it's because you feel you have to or literally have to. >> bob pisani has been making calls to find out what happened. what did you find out?

>> i've heard phrases thrown around like flash crash which concerns me so i called some desks and even gone backstage to the nyse people and asked, is there anything unusual going on? i've heard nothing i've heard no reports of any fat finger trade or someone hitting the button wrong, erroneously hitting sell orders, i spoke with the nyse, how is the plumbing working everything is working normally there is nothing unusual going on in the way the market actually functions what's happening here, and mike's absolutely right, we just hit a large number of sell orders, of stops as you go through these levels, you get people who have natural orders where they're going to sell here it happened really fast in a very, very short period of time we talked, art and i about 2017 as 50-day moving average a lot of sell stops hit at different levels, different companies have different levels.

that's the simple way to understand it. but as far as something's gone wrong or anything, nothing there. nothing that i can see right now. back to you. >> it's an important point is there anything else you're hearing from the guys on the floor about -- i mean, we're kind of looking around here. there's no sign of anyone overly concerned about the action we've seen you kind of heard the noise pick up when we were down more than 1,000. we're still down nearly 900 right now. >> it is still -- it is difficult to explain to the average person -- we were coming into your show, kelly, we were down 700, ten minutes later we were down 1600 four minutes after that we were down 800 and we've been bouncing around it's difficult to explain to the average person, what changed in the market 800 points in 11 minutes. and the answer is, nothing fundamentally changed at all but market moved down rapidly, hit the sell stops this is the modern market, for good or bad, i happen to think there's a lot of good in the modern trading style obviously, it can give people angina when days like this happen. >> mike, why are we talking

about this like the modern market anyway? it's been more calm than normal. i mean, these kinds of declines in the history of the stock market are not unusual is it just because it's a bigger point figure when you look at it or because of the sharpness and the speed of the selloff today >> i think you have all those things. >> i think things happen in an accelerated way in this market when they replace, they reprice relatively quickly i don't think you have to say it was literally a malfunction of the plumbing of the market to say that those were not correct prices, in a sense yes, they were reacting to the supply and demand at that moment, but you have this field of play, which is about, you know, this trading system and this model and it's going to execute on an automated basis and reacting to other things like options prices and it just basically -- people just walked away. >> one point i love that jim made, but we never get a good sense of what happened i mean, it's very hard it doesn't matter, the day after, the week after, you go back to the flash crash and it

was months before -- >> you might hear about a hedge fund that was carried out. you might hear about something like this that happened. >> it's frustrating because you can't go back and build stories about what did or didn't cause it. >> let's bring in jon najarian what are you seeing today? >> boy, another very heavy day today, bill, with just unbelievable volumes in there. to highlight some of the things both bob pisani and mike santoli are talking about as far as things functioning well, yes, things functioning well, but there was obviously automated cancellation of orders on the bid side and perhaps someone being liquidated that was being front-run. that's what it looked like to us on our side, looking at our data it looked like a very large order was being front-run. it could be, as bob said, there were so many stop orders at a certain level.

that can certainly be part of it but there was just a slam from 800 down to 1500 down. that's 700 points came out of nowhere. and i believe that most of that -- as soon as we crossed 1,000 we were jumping at 100-point increments as far as the dow jones numbers i'm talking about here, similar percentagewise in the s&p, but they just slammed it somebody was doing a liquidation. that's what it looked like to us as well as, perhaps, a lot of those automated cancellations. >> jon, let me ask you about this we're down 1,000 points, jon let's say there was a cancellation and someone front-ran all that you're telling me you can still get exxon down 5% from yesterday, chevron down 6%, google or netflix down -- i mean, there's an opportunity for people to come in and buy at these levels if they want, right? we're still sitting down here. >> yeah. and for good reason, too because people are worried about many of the things you have already discussed. was there a fat finger that caused it? what was it that caused this

what did mr. powell say? what did jay powell say? janet yellen tossing a grenade into the room before she left when they hits wells fargo there were a lot of things all over this market not all of them hit today. it kind of led into it on friday traded 37 million option contracts on friday. that is extreme. we've already traded, according to our computers right now, 33 million contracts. we still have another 35 minutes to trade before the s&p closes i know the rest of the market closes in 19 minutes that's going to be something, kelly, to watch as far as this is that kind of cathartic, that kind of explosion in the volatility when we saw that 75% pop in the vix, like that, i mean, we went from a 30% pop to 75%. that is amazing. there was virtually nothing in the way of it as we accelerated. to me that says a lot of people

pulled back bidz and a lot of folks were trying to get out of one door very quickly. >> yeah, those exits have been clogged today, that's for sure >> thanks, jon we'll seal you later this is one of those times where we'll be hearing in the next few days who may have had to liquidate, right we'll find out - >> you would think so. >> the silence will also be deafening. if we don't get those stories pretty quickly it's difficult to tell. >> in gate what we're talking about is the very popular and very attempting shosht volatility -- >> one of the best performing last year. >> that is the kind of activity where you're basically -- you're close to being carried out today if you're not. >> we're in blackout period for corporate buybacks. >> until companies report earnings they're in a blackout period so, that's one element of it you can't quantify what would have happened. if you've reported earnings, i think a lot of companies are free to step in. >> they don't usually move that fast when --

>> yeah, they're not that opportunistic to soak up all the supply. >> you have to have a committee meeting before you can do that let's bring in traders and money managers with our "closing bell" exchange rob morgan, kenny has come off the floor and rick san stelly at the cme in chicago rick, let me bring you until quick. from your perspective, the ten-year yield has dropped ten basis points somebody is buying some bonds as they sell stocks what do you make of today's action here? overall. >> the stock market and all thele electronic trading, is the new model. there's no going back. to create the kind of access into the marketplace that satisfies creating complicated derivatives, constructing etfs, you can't have the old style people under a tree. i really disagree with jim as a matter of fact, i disagree so much. i want everybody to look at the chart. this is when i was in the pits this the '87 crash this is what ten-year note

yields did versus ten points versus that ski resort mountain slide we did back then. see, to me, we have nuclear fissiion with atoms splitting. periphery markets, whether it's foreign exchange, fixed income markets, aren't doing anything back in the bad days when there were bad things going on, it was about an event that included every aspect and every interpretation of what makes an economy good or what makes an economy bad. this pretty much is about religion from central banks gone awry listen, they built it up they built it up to 16.4 trillion on balance sheets at banks -- at central banks. which is actually february 2nd's number so, it hasn't deteriorated all that much. the correlation with that and stocks is clear. the other thing that's always clear is, market traders always like to be ahead if they're going to pull out that support from central banks,

something's going to give. it's not going to be gradual anybody try to lift an anvil up to the sears tower it's really hard once you get up there, throwing it off is really easy. in my opinion, i give a big hats off to the markets i think whether it's new york stock exchange, cme, i think it's been remarkably well done considering everything that's happened remember, when markets get wild, theed by/offer spread goes from little incrementals that big to this large >> hey, rick, you know, steve liesman was pointing out that the expectations in the fed funds pits had dropped dramatically for a rate increase this is jay powell's first day as fed chair with this kind of a selloff, do you think they might be rethinking a strategy that might have been in place to raise rates here is this one of those situations where they're going to have to look at the rate of what the market's doing as it readjusts its expectations and maybe not raise rates as fast as they would have otherwise

>> absolutely. but it isn't only our new fed head in terms of jay powell. this is about mario draghi, this is about carney, it's about all central bankers. i personally think fed funds tell you a lot but they're also a market it doesn't mean the percentage has changed in the fed's brain it's a market. it's like a t-bill market. yeah, they bought the heck out of it. if you look at some of these contracts drop eight or nine points today in the back months like november and december, that's a big move. so what that says is you could do a percentage and say that means this but the real issue is, does the fed look at the market and change their behavior? i would say my emphatic answer would be, yes, they will >> kenny is here. >> i disagree with that. i don't think today's action or yesterday's action is going to cause the fed to change their mind if this continues a few more

days and we're down 1,000 points, yes. >> we were down 1600 points a while ago. >> i hear you. >> what more do you want >> but we bounced back we broke through the technical level on the s&p and on the dow as well. the market went into this freefall whatever happened in that last 15 minutes when we went from down 1,000 to down 1600, whether it was someone getting liquidated, whether it was some options trade, whether it was people running for the door because they're starting to get really nervous, i'm not necessarily sure any of that's going to change the fed's mind set. >> or that it should. >> it absolutely shouldn't quite honestly, we're here because the fed put us here, along with the ecb and bank of japan. the market is at this extraordinary hide because the fed kept pumping money into the system and said, don't worry about it now we're in a position we don't know how to get out. we've been talking about it for months, no one has been paying attention. inflation rearing its ugly head. now everyone is getting nervous, how do we get out of it so the

market models are repricing. >> if that's true, does that mean stocks need to be repriced? when when jenny owens acknowledged they were too high going into the weekend. >> when answering that question, let's take a longer view here. the bull turns nine years old next month during that nine years we've had double-digit 5% pullbacks and 10% corrections. double digits. and every time it happens, just like today and friday, it feels like the world is coming to an end. to answer your question correctly, going back to something art cashin said earlier, and kenny just referred to it as well, we just broke through the 50-day moving average. that's a pretty strong level -- there's a strong floor down 12% on the s&p by the way, that's what happened a couple years ago so, i think we're -- so, is the market going to reprice itself it's in the process of that. art said it's going to find a

floor. and then we'll all say, my god, the fundamentals look great here >> stocks are on sale. >> the repricing may not be done i just heard cashin say the market on close orders are on to the sell side of $3.2 billion. >> i'm not surprised by that i think that will pare off as we get closer to 356. it's not going to be 3$3.2 billion at the final bell. it won't trust me i don't think necessarily the back off with the selloff is done by any stretch yet. i think because we broke those technical levels, the market will thrash around until it finds some support that might be down at the intermediate support of 25, 30, is that what the number is >> that's right, kenny 2532 that would be down about 12% on the s&p and, like i said, though, the same thing happened two years ago. feels like the world's coming to an end but then we find that floor -- >> i will say. >> just to echo what rick was

saying, two years ago high yield was blowing out. oil was crashing you had an industrial earnings recession, the rest of the world slowing to a crawl this is annic wit market twisted up on itself it's not sinister. it just means the market is basically very fouled up right here and it's really about its own mechanics and a massive wave of profit-taking that fouled up the works on the way down. >> it's twisted up because if you look back over central bank policy, we dragged it on too long >> i'm talking about the mechanics today. i don't mean the levels -- >> but the mechanics today are functioning fine people might look at these numbers and say, oh, my god, it's so chaotic -- >> but the situation you're describing is more people taking a look at the landscape saying we don't know what the ceiling is going to be going forward. >> right. >> it's a little different, though, if you're in the market day to day versus taking a much longer view of it. >> that's correct. >> if you have a much longer view -

>> this is great if you have a much longer means. >> absolutely. >> so should the long-term investor be panicked you welcome this. >> let me look at this you missed a day near the top of this last hour, the dow was down 1600 points in a climactic selling period right there and then it came back. as you can see, we're down roughly 1,000 points at this hour, this after last week we had the biggest down week week-over-week for the dow in two years. art cassidy from rbc capital is with us and nancy tentionler from heartland financial i would point out the second worst performing sector today are the financials wells fargo would have a big part of that because they were down 7%, 8% even before this major selloff with the action taken by the fed but what do you make of what's going on today, putting in perspective, if you can. >> sure. when you take a look at bank

stocks in particular since the beginning of the year, they've had a great run. obviously with the tax reform we saw in december, the underlying fundamentals for the banks continues to improve but the stocks should have a good run we are saw them sell off the wells news is unique to them because friday after the close, they signed a cease and desist order with the federal reserve. >> nancy, are people coming after you with the pitchforks here we spoke about a week, ten days ago and nancy said, maybe that day mike referenced, the first day we were down two-thirds of 1% and nancy said you want to see a much bigger corrections. what are you making of the action as it plays out here? >> we need this. you had a guest on earlier, i didn't catch his name, but this feels like the february moves -- january and february in 2016 so, this is an opportunity for long-term investors. as kenny said earlier, to get in there and pick away at the high-quality companies which is what we'll be doing tomorrow morning. we may not be at the bottom, but, you know, just like 401(k)

investors invest over time, we'll go in and dollar cost average our way in at lower levels what spliced me the most was the january move up. not this move. we should have done this a lot sooner. >> is santelli still there >> yes, i'm here. >> you're a trader a market is a market you've seen plenty of action like this in your long career. what do you expect the markets to do over the next few days what do you think? >> i don't think equities are magically going to recoup all this in a short number of days i suspect somewhere around 235, the dow will find its legs and it will consolidate. very much like art said. as the heart patient takes longer and longer walks around the block. the real issue here is, is that as long as the dollar index and the treasuries remain in somewhat the same neighborhood of the range they've been in, i wouldn't get too upset by it i still contend that if you look

at the chart of the dow since the november election in 2016, the last major pause it had was around 235, 24 i would expect that the market's going to get there one way or the other. >> all right are we going to let everybody go here you've got to be - >> yeah. you should get back to work. >> the one thing this -- that this is doing is it's sort of short-circuiting the narrative we had a week, week and a half ago which is market melting up, speculative frenzy to the upside it was tracking 1987 but at the beginning of '87 when you still had 30% to go. we have a late - >> either short-circuiting it or confirming. >> i think in a sense -- >> we're up too much too quick we need some potential snap back to correct this. >> i think this would almost get in the way of that, okay, we're now going to get crazier kind of story. i do think there's a lot of late coming small investors who threw

a lot of money at this market in january. they're not feeling smart at the moment doesn't feel smart to do it but they're not feeling that way so-to-my analogy with the concussion protocol. this market will not get its legs under it and run back to the highs. it's got to have a period of figuring out - >> which would be unusual. by the way, every correction we've seen, this whole cycle going back to the financial crisis, it's actually been snapbacks that have been severe and stronger and quicker and sharper than people expected that would be an inflexion point, if we didn't come off this it speaks rare to see the dow down 1200 points we're down 6%, 7% in two sessions >> yes. >> rare we see that, ever. >> it is rare. it's a changing character on some level, without a doubt. >> i have to step aside to get down to the floor. let's bring in seema for more perspective. >> we've been highlighting the broader performance with the dow down 4%. s&p lower by 3.7%. let's highlight where we're seeing the weakness, which stocks are taking us lower

take a look at some of the biggest movers not just today but year-to-date you'll see 75 s&p 500 components have lost 10% since the all-time high we hit on the s&p on january 26th the biggest mover year to date and even today, chesapeake, tractor supply, met life and harley-davidson. one trend you can see right here is just the underperformance in energy it's the second worst performing sector today here are the big movers. hess, exxonmobil after disappointing results last week, chevron and baker hughes joined the crowd here energy a big part of these selloff story today. >> seema, thank you very much, walking us through some action you can see big decline for individual movers. the big deadline is the dow down more than 1,000 points with 3:30 to go. that's a 4% decline. we were down 6% at the worst of the session low. 1600 down on the dow

comes after friday's big drop. >> i'll let you get ready for the next hour. i'm not going to take issue with jim cramer who's always the smartest guy in the room, yet it often will be the case, people will say something broke which we get this kind of market action this is market action. they don't talk about the market being broken when it's up as much as it has been for the last nine years with very few major corrections. so, for this kind of action, yes, as dramatic as it is, as attention-getting as it is, this is how the markets work. and they're not broken you just had a cancellation of buy orders that caused this vacuum that sent the market down here we are, down 1,000 points today. back below 25,000. it was on january 4th that we were cheering the market higher when it closed above 25,000 for the first time then above 26,000. the market is just doing what it does it's all about -- it's all about

price seeking an equilibriuequi. we're down 1,000 points there. the s&p down 98. the ten-year yield because that's where we saw a decline in the yield down about ten basis points as they were selling stocks, they were buying bonds bob pisani is here with a special guest. a guy who's been watching this market very carefully. the president of the new york stock exchange, tom farley. >> everyone is asking, what exactly happened you're watching the systems. tell us how they run. >> was it a fat finger >> it's an extraordinary day we don't have a lot of days like this, as you know. when we have these days, and they do happen, we just make sure the systems are working smoothly the good news about today is it has been remarkably smooth we haven't had on the new york stock exchange we haven't had a single luld. >> stock down -- >> a stock that moved in such a disorderly process that we had

to limit it. we did get close to a marketwide circuit breaker. >> that is 7%. >> we were down by 5%. we practiced for this. we're aware these can happen and the industry is prepared for it. turns out we will likely not hit it because we just have a minute to go and we're not particularly close. >> to bill's point, there were concerns there was a fat finger, maybe someone put in a ridiculously large sell order by accident nothing like that? >> i think there will be time to look back and see exactly what happened i just look at the messages coming in, are they being processed appropriately? we trade 6.5 billion shares. i believe today will be 11 billion. the messages will be triple. that's what we focus on. >> the system worked the question is, what happened how do you explain to the average public that we drop 800 points in the 11 minutes that bill came on >> close to 1,000 points in ten minutes is what we saw the trades did happen in a fairly orderly sequence, which

is helpful in making sure we maintain confidence in the market. >> part of that is a function the level we're at on these major averages and the fact we have a lot more computers doing that things are going to be quicker and bigger >> look, there's nothing new under the sun. there's always been volatile days just so happens the dow is at a higher level, so it's the biggest hour drop offever but in your career you've seen this many different times. >> tom farley, the president of the new york stock exchange. bob, you'll be sticking around as we -- this is one for the record books the dow down 1175 points on the close. back below 25,000 on the dow let's go to kelly evans with th second hour of the "closing bell." >> announcer: this is cnbc breaking news. market selloff >> welcome to the "closing bell," everybody i'm kelly evans. dow closing lower by nearly 1200 points today about 1178

there's the close down below 25,000 the dow is now negative on the year all of the gains from january and february have now been wiped out. we've lost 2,000 points that we gained over the past six weeks or so to start off this year better than 4% declines for the s&p 500 as well down 113 points to 2648. also negative on the year. the nasdaq composite down a little less than 4%. back below 7,000 to 6968 it's barely higher for the year. and the russell 2000 small caps down a little more than 3.5% they're below 1500 also in the red on the year. it's been an extraordinary session. our bertha coombs is standing by to look at the action on the floor in the nasdaq. bertha >> yeah. kelly, it's been quite extraordinary when you think about the fact that just six trading sessions ago we were at all-time highs on the nasdaq and we have given back a good 6% of that just in a matter of days

here overall, the nasdaq still barely positive part of the things that intensified the selling this afternoon was that it fell below a technical support level, below that 50-day moving average hasn't really been down below that so heavily since last september. we saw basically all of the sectors moving lower a lot of them moving below those technical levels as well chip stocks were particularly hard hit they have been among the most volatile in this selloff over the last few days. what really brought us to negative point was apple apple had rallied off of a technical level this morning at 200% below -- or 200-day moving average and then it just failed after testing that several times today. apple now closing down about 11% from its recent all-time high. it's not alone in terps of the stocks now in correction here on the nasdaq the nasdaq 100, two-thirds are

in correction territory. among them some of them falling in today, including netflix and google as well google parent alphabet those stocks now also off about 11%. it looks like those stocks are also very close to being negative for the year along with apple. along with that, about a quarter of are in bear market territory. it's no surprise that a lot of the big names there are the chip stocks lam research, which had been one of the big melt-up stocks, chip equipment maker with concerns about apple pulling back on some chip production and changing out chips, the chip equipment makers have been taking it on the chin. lam research, maxim, micron among the stocks in bear market territory. we are today, with huge volume today, kelly, much more than we saw on friday's selloff, it intensified here this afternoon. the nasdaq 100 trading about

300% above its average daily volume back to you. >> bertha, thank you there's the dow, down 1175 points the biggest one-day point decline we've seen fryer that the biggest decline was during the financial crisis. the percentage decline is smaller. a little more garden variety but still historic the dow jones down 4.6% today. it was down about 2.5% on friday bob pisani, it's adding up to a pretty big number. >> it is a remarkable day. we have talked about the risk to the market recently. three principle issues number one, we've talked about inflation risk higher rates impacting stocks. we have talked about valuation risks. the market is pricey and therefore vuler? able to a selloff. we talked about the political risk about the fight with president trump. >> reporter: and the fbi and the debt ceiling those are all political risks. all that fixes into the stew today there wasn't any fundamental, no headline that came out it was technical trading let me show you an intraday chart and some things that happened we hit the lows at the open when

we were down at the bottom, 2733 a modest rally going into 10:00. we moved up but the buying was very lackluster. not very enthusiastic. and that lack of volume really hurt the market a little after so:20 because we started drifting lower the buyers walked away we hit another new low around 12:00, 12:20 once we did that, volume picked up we bottomed around 2:20, we hit the 50-day moving average, tried to rally, couldn't buying enthusiasm was not there. every time we hit new lows, the volume picked up on the downside these are very bad technical karats overall let's take a look at what else happened today we're trying to find a bottom. that's the story simply here the volume on the upside is not as great as the volume on the downside selling is not yet exhausted and the buyers are still not sufficiently enthusiastic to come in. let's take a look at the vix

because an extraordinary thing we had multi-year highs on the vix. very rare when you see the vix go to 30 now, what happened here is as the s&p started dropping, we hit all of the stops at the -- on the puts that were much more expensive. you go down very, very fast. that's what determines the price of the vix as the market drops suddenly, the vix just blew up on the upside that's a natural way of the vix. the question is, where is the bottom i want to emphasize, there was no technical failures that we could see in the market. we just had tom farley talking about it it was instead a cascade of sell stops that were hit, including the 50-day moving average. now the question is, we've seen professionals in the last few days get involved in the market. now the question is to what extent will retailers come in, make a decision to buy or sell the average retail buyer of the s&p 500 is now under water by 2% or 3% for the year they have put huge amounts of money in january we talked about record inflows

into exchange traded funds average retail buyers throwing money at the market in january now that they're down 2% or 3%, here's an interesting question, are they going to stay put or try to buy more or will they try to get out at this point thursday night we get some etf flows. that's what everybody's waiting for right now. back to you. >> that's one to watch, bob. thank you, bob here on the panel joining me, cnbc senior markets commentator michael santoli who has been with us all day. liz ann sanders and charles olsen. thank you for joining us mike, first of all, we were down 1600 on the lows we came back we retraced half of that for a time maybe it looked like it was an aberration of some sort. some literal fat finger trade. when you close down 1175, close down 4.6 mrs on the dow, i don't care what happened during the session, there was plenty of time if that was just a one-off whacko thing for that to correct itself and we still closed down in one of the worst sessions ever. >> definitely genuine selling

pressure whether it's forced, whether it was some kind of liquidation, qul it was some mechanical reallocation we don't know any of that at this point what's clear -- everyone puts it in context and says this market was extended to the upside a week ago it was in need of a pullback this pullback and profit-taking was pent up and spilled into something of its own -- its own force. in other words, it's not reacting to the economy, to corporate news i want to accentuate when we see volatility volumes shoot up, you have a macro scare, bank insolvency, the oil market was crashing. none of that is going on so this is an equity market event. it's as if we're getting all the volatility we didn't get for 14 months all at once. >> i'm not sure if i'm impressed that the dow is down or the vix which was below 9 for months and -- at least 10 for months and months and months, 38 now.

what are you doing is this opportunity for you or what do you think is going on here >> speaking about the vix, i think the spike in the vix may be a more proximate cause for what happened today than the decline in dow or s&p 500. if you go back a couple weeks, a survey about what were the most overcrowded trades and interestingly a few weeks ago the short volatility trade had overtaken the long bitcoin trade as the most overcrowded. so, i think some of the tryingers to the extent this was some mechanical force selling stop loss points may have been at least as much tied to what happened to the vix today as what happened to the stock market averages. >> if that's true, which is such a great point, then i guess the question becomes, okay, can you flesh everybody out of that position in a session or two if that's the case for a lot of people sitting at home who were affected by this but have nothing to do with the short volatility trade, is it an opportunity?

>> well, it may eventually be an opportunity to the first part of your question as to whether we hit the maximum pain point, whether we've flushed that money out. i don't know the answer to that question i think that's something we'll all hopefully discover over the next few trading sessions. >> yeah. what about people who are saying, okay, well, fine, if you're telling me it's a trading thing and everyone was on one side and this just got pushed out of the way then, should i look at a stock like i keep mentioning, exxon or chevron, they had weak earnings, maybe it goes down to that, down 5% today. is that a gift if it's happening for market mechanic reasons, are there stocks trading on sale as a result of this >> well, there are certain stocks down quite a bit. the dow on the intraday basis hit a full 10% correction at its worst point. i'm not a trader that's not my orientation. i don't give advice to traders on our platform. i think from an investment

standpoint, i think discipline, diverse indication, rebalancing. we've been saying you're employing to have a great opportunity for more frequent rebalancing in a year where we expected volatility to pick up maybe not a spike to this degree in the very short period of time, but i'd be disciplined and use things like dollar cost averaging as opposed to pick your precise moment. >> jim, i know you watched the macro as close as anybody here from your point of view, has anything changed on that front that would precipitate the kind of market moves we're seeing >> well, i think there's reasons for why we were down i mean, we certainly have been talking about challenges the market faces bob mentioned some of those here recently i think that collection of challenges is coming home to roost. it's certainly quicker than people always think. it's coming through. it's not all unhealthy i think the reality is that we've changed the stripes of this recovery, kelly we're now growing 3% plus real

gdp, 5% plus nomal gdp we're going to push into the three-handle on unemployment we have wages that are going to go over 3% >> right so those -- what you're describing sounds like a change to me. >> it is. >> do you think the markets are changing to account for that and what is that going to look like then? >> i think that's what they're doing. that's my guess. i think that the markets are changing their valuation, if you will, for an economy that will be growing now at full employment and will now start to suffer from cost push pressures, wage and interest rate, wage and capital cost infreese, and inflation that's 3% or more. that probably means more like three-quarter, 3.5% ten-year at some point, more like a 17-type of multiple for fair valuation and i think this is part of the processes of getting to a more supportable valuation for the new character of the

synchronized global recovery. >> mike, do you agree with that? >> yeah, i completely agree. in fact, one of the things jim point out that got a lot of attention a week ago or so is nomal gdp having jumped above the unemployment rate. you add that to the supply growth now below the rate of growth in the economy and all of those point to a very different landscape in terms of inflation. i think the kicker was 2.9 on wages. you're starting to see it feed into the inflation data. you blew through 2.8 on the ten-year yield i think those were the fundamental drivers. the fix thing i think was more the mechanics of what happened today. >> if that was just the mechanics but there is something more fundamental going on, that's sort of the question of the selloff we're seeing is it warranted or not you know, is it -- is it warranted or not is it something that is more than afemoral? it sounds like if there's more than fundamentals, something is going on here. >> stiter monetary policy, less

liquidity. that's been the story behind the success of this bull market for nine years now and i think it is an important shift. it doesn't necessarily mean the bull market comes to a crashing end but it does mean we probably ushered in higher level of volatility and more sensitivity to what growth means for inflation. that also causes a rerating of valuations, and so does a day like today. >> it's fascinating. you think about what this means for the federal reserve. steve liesman mentioned, when markets sell off, it usually pushes out the likelihood of fed rate hikes inflation, growth looks, wajs, that's the last reaction function that makes any sense. >> what we don't really know right now, we don't have clarity with the brand-new fed chairman exactly what that reaction sequence is going to look like that's where the debate is going in the markets that's the intentional tension of these markets is how good is too good for economic news how hot is too hot for inflation

and all the rest of it i do think, though, that you had the dow down 2300 points it was up 3,000 points from thanksgiving to eight days ago >> wow >> you've given up most of that. you also have to come to the question of, how much of the 3,000 points of upside was not really a response to fundamentals, was not really something where the market - >> why were we talking about melt-ups and -- again, just to emphasis, we were 7% above the 50-day moving average, 14%abov the 200-day moving average on the s&p. we talked at great length about all the weird signals going on to the upside in the market. this is this bringing us back? >> a little recoil i don't know if this means we just swept the froth away and it's got to settle out from here or if it's just a longer period but we're going to have to chop around we're going to sister have to, honestly, let the vital signs of the market come back into normal range. >> jim, what were you going to say? >> i was just going to say, one thing that impressed med today a little bit, or this week, last

week, is we've moved the dow down as much as we have, as mike point out, the s&p, 6%, and we barely moved the ten-year yield. ten basis points below 2.85, its recent high. we've had a huge collapse in stocks and we still can't get anybody to buy a bond at this elevated level i think the tips inflation expectation barely moved off its highs today. it's interesting how much market pricing in other markets are sticking even though you're having a panic in the stock market normally this would cause a big rush into bonds and it hasn't happened >> makes all those indicators more important over the next couple of weeks and months do they show it's sticky do they show the wanls do they give us some sense of that it's going to be important jim, liz ann, thanks for joining us >> thanks. >> thank you

leslie is here with a market flash. about lulu lemon. >> lulu lemon's ceo has resigned as ceo and a member of the board effective immediately. the company is saying that he felt short of the company's standard of conduct without extrapolating further about where he exactly fell short. the board has begun a search process for the new ceo. in the meantime, three senior leaders will report directly to the executive chairman, glenn murphy the company reaffirmed guidance. didn't indicate this move would impact financials in any way as you can see there, the stock still down 2.6%. reuters reporting that potdevin receives cash payment of $3.4 million as part of the separation agreement back over to you >> leslie, thank you we're about to go back to the broader markets. this news is actually big news

but its going to get lost in the shuffle. i don't know if that's intentional or not. >> i don't know about that either it will get lost in the shuffle. i think in general, this was finally a complete indiscriminate washout in the markets. so, you're going to have a lot of individual corporate stories, good and bad, that basically got overlooked that's the makings of let's pick through it and see what got punished too much. >> i was going to make the analogy back to the financial crisis maybe that's a little bit too much of a leap to what's going on today. in terms of the declines 4.6% on the dow. much more garden variety than the point drop you're seeing which is the largest we've ever seen bob pisani, and doug by phone to explain a little bit of the market actions today doug, let's start with you what did you see >> well, we saw a huge burst of volume from our retail partners who

fat finger trade, did somebody send a stupidly big sell order, a market malfunction you're one of the biggest market makers in the world. from your point of view, the market functioned, is that correct? you didn't see any malfunctions? >> absolutely. we had had a lot of orders coming down through the pipes and we were taking off a lot of risk on the atss and there was not a single sell, no fat fingers we saw, no busted trades, repricing. it was just an avalanche of orders right around 3:00ish. as i mentioned, we did notice a strong, you now, sell/buy in our retail partners, the orders we were getting through the retail pipes other than that, everything functioned very, very normally. >> how do you explain this to the average viewer

when kelly came on, we were down 700 points 11 minutes later we were down 1600 points and then 800 points. you have to admit, well, there were a lot of sell stops that came through that may be true but it's hard for the average person to believe that >> look, i'm the market maker, bop. first and foremost, i'm all about making sure the market functions properly obviously, some of your prior commentators mentioned it. there's been a real question as to fundamentals. maybe this 2700 was a resistance level that kind of got traded through. you saw people taking their profits. if you're in this market, you know, 15, 20% lower and you want to get out, you know, this is -- this might have been the day to do do it and that triggered stop losses, et cetera. you have this kind of snowball effect where people are taking their profits. you know, the market functioned fine considering there was a 4% drop again, it's a fundamental shift in what the market looks like, we'll find out tomorrow.

>> the vix went to 38. doug, you do well in market volatility, right? you had a good day, right? >> we had a good day the vix is our friend. maybe a lot of people covering their short position in the vix but 38 is good for a market maker. >> doug, i was going to ask you if you can tell us anything else about what was going on during the session today. if you have any afal i goes to the previous flash crash experiences or other times we've seen people get liquidated or wiped out of the market. what did it remind you of simply watching that? can you give us any -- can you help us all understand maybe from that point of view what we just saw. >> sure. i think from that point of view this was not like august 24th of the flash crash. august 24, 2015, you saw severe dislocations in the prices of etfs and underlying securities things just trading unnaturally. there were structural flaws in the market

i think a lot of flaws were fixed by wok of the new york stock exchange i didn't see that, stocks trading down to the penny like in the flash crash an inordinate amount of volume the sell orders significantly outweighed the buy orders. fundamentally more than that, we didn't see any of the market dislocations we've seen in these other ooeveevents i wouldn't call it a flash crash. we should be thankful the market functioned beautifully the results are not what everybody wanted but people got risk on and off the books. >> doug, one other thing even after we closed, it looks like some selling pressure has not let up i don't know if you can see the action in front of you on futures, but do you find it unusual the way we solid into the close and apparently that pressure is still there? >> no. it's up with of these markets where people are selling into the close. i wouldn't be surprised if you see that again tomorrow. we continue to trade post-closing so we're seeing that right now in the market

it wouldn't surprise me if this market opened up down tomorrow and then from there we'll see -- we'll see where the resistance levels are and see if there's a rally or not. >> since we've blown through so many -- i don't know what you call them, technical level sell stops, but question is, where do you see a bottom technically it seems to me on any normal parameters we hit some selling climax today and we're not quite sure if that's the bottom or not. >> yeah. very, very tough to say. as you know, as the market maker i'm just here to transfer risk i can't tell you if we've reached the bottom or not. i can till the market functioned real well. i think we traded over 11 billion shares which is a record for 2018 that's the highest level we had in a couple years. there was a lot, a lot of volume out there today. >> by the way, doug, it i know how you're talking you're in the middle of all this, but if the short volatility trade did get so crowded, do you have any clarity on that and whether we moved through a process of

normalization or if that was a big contributor, what we saw today? >> i would think that the vix would come down somewhat tomorrow seemed like there was a lot of action and it spiked up pretty dramatically it might have been people covering their short positions, is kind of what i'm -- what guys on the desk are telling me and what seems makes the most sense. i think tomorrow we'll see some of that come off >> doug, we typically will see margin calls around 2:30 you sat on the desk all afternoon. when i called, that's where you were did you get any sense that suddenly there was a spike in volume activity at all due to possibly margin calls? >> no, i didn't see that it was around the 3:00 time we saw it like i said, i wasn't sitting at the desk i was more pacing around the desk to see what was happening it was 3:05 to 3:15ish or so when we saw that exaggerated volume come through the pipes. it was a pro longed selloff period as you saw and then bounced back during that time period we saw

severe imbalance of sell orders coming through our retail channels. >> what do you mean by that, coming through the retail channel. >> we're a wholesaler so we are -- we are wholesaler of retail orders. so we have a lot of market orders coming from our broker partner dealers. the big electronic retail broker/dealers, we're their partner and absorbing those orders during that time period. >> yeah, i'm just wondering if that means it wasn't an institutional phenomenon or if that's making too much of it. >> yeah, i think you might be reading too much into it with obviously we see retail and all the institutional orders get routed to exchanges and atss, the dark pools so we awe saw a lot of exchanges in dark pools and atss i'm sure there were a lot of institutions taking profits as well >> doug, bob, thank you. bob cifu from virtu financial with bob ba san any. let's talk about the charts after a day like this. jeff from renaissance macro over at the tell straighter.

>> great to have you here on a day like this. i know you have the chart of the financials up here what in general has today done to the setup technically >> we did a note today that said this is 1987 based on the correction today was the first day we saw a spike in put/call ratio. we saw a spike in the trend. that closed above 350 which is a big number anything over two is good. you finally had a first day of really starting -- >>kind of a purnlg. >> exactly that doesn't prevent tomorrow from opening lower i actually expect it does. you're getting in that zone of probing. i think it's 25.35 is the 200-day. anywhere in that zone -- 4% -- >> settles in? >> right. >> you have the '87 financials versus today. >> in '87 they were weak they were declining for almost a year prior to the crash. today you can see, in fact, on a

cap-weighted basis they were the only group last week to make a strength high. a completely different environment. people are focused on the ten-year yield financials are positively correlated with what you're seeing out of yields we think that's a good thing, not a bad thing. we're reluctant to believe it's the ten-year yield and that whacked the knees out of this thing. i think it's less nefarious that people are giving it credit. >> i was making the point that today was an equity thing. you didn't see the credit markets get very upset, look too stressed you have a chart of corporate bond yield relationships. >> we look at the difference between dd and bbb spreads what you'll see here is that they're still in very, very good shape. >> in this case, higher is worse. >> higher is worse, right. as this continues to decline or at least stay stable, it says people in the credit markets are pricing risk, the marginal ricks effectively as aggressively

today than they were two, three months ago >> and the s&p 500 against the ten-year treasury yield. >> look, i think you look at what happened in the taper tantrum. here's the taper tantrum back here the s&p didn't even blink. you have a breakout pretty clearly and people are making a big deal about this. until we get effectively through 3% in a meaningful way, there's two things there one, it's the peak from the taper tantrum, that's a big deal, makes that a huge base formation which gets a little uncomfortable from a technical standpoi standpoint the second thing is you have to bring the yields up through 320 to break the downtrend line that takes you back to 1981 before you and i were even in this business we've been in a secular bull market, almost everyone's career here i think we're still in a secular bull market for bonds. until you break through that, i think it's hard to say the bond market is going to be a linchpin to pull the rug out from the whole thing. >> i wonder if you would turn that around and say yields did come in a little bit today it was not exactly a huge flight

to safety trade in a dramatic way. but if yields trend lower, will that hinder the market or we're okay in the zone >> i think if you get yields substantially under 2.50, i'll worry about that impact on equities our work shows the two-year yield is more important than the ten-year yield ten-year goes sub-1.95 i'd worry about the health of the economy going forward. right here we're fine. >> you're tell me you're looking at yields going back down. we spent the whole time talking about how the ten-year has done from 2.4 to 2.8 and now we're talking about it going the other way. >> it's bearish for equities. >> i understand you're saying it's an if but is this a scenario that looks more likely that the yield is going down instead of further up? >> i don't believe so. unless you believe in a v-top in yields, we don't tend to that that, it's an outlier event. i don't see that being the case. particularly with what you're seeing in the dds and bbbs the credit market would sniff

out, if there was a recession, the dd did thes would sniff that out far in advance of today. and it's not doing that. >> back in the fall you were the one who kind of handicapped -- >> the melt-up. >> -- the melt-up scenario we got right through january. one of the things people have been hanging their hat on, saying even when one of these straight-up periods ends in a sharp break, usually that's not game over for the bull market. >> correct. >> is that your assumption >> yeah. the percentage issue of making 65 day highs was 83% at the end of last week you don't end a bull market with that up. end itwith the markets going up, that number trailing off, looks sloppy it's everything in terms of momentum yeah, it was stretched you're drawing vertical lines to make trend lines it was stretched consolidation pause. we make a low. i'm guessing some time this week we kick around, we break out if we fail to break out and make a new high and roll back over and that's going to be probably march or april, we've got bigger ratios it's very unlikely you make this v-top and you just go down >> study the character of the bounce and all the rest of it. >> absolutely.

financials relative at a new high, even more unlikely. >> jeff, thanks a lot. appreciate it. >> good stuff. again, if you're just joining us, here's what happened in the markets today. at the lows the dow was down almost 1600 points here's a rerun of what we saw. we started out this morning with some weakness after friday's big decline. what looked like big then. we were down 2%, about 2.5% on the dow. going into the weekend futures down a couple hundred points this morning it looked like we were going to turn positive on the session today. what happened? fast forward a little bit as you'll see here. we started to sink throughout the early afternoon. and then right around 3:00 all of a sudden the selling really started to pick up we went from having a 2% decline to a 3% to 4%, 5%, a 6% decline on the dow remember, it's 7% drop the circuit breakers kick in and you can see the damage there. we were briefly down more than 1500 points. on the bell the close at 1175 points on the dow, biggest point drop we've ever had in

percentage terms a difference story, down 4.6% that makes it a little more of a vanilla decline. still unusually historical standards, especially after the trading action we saw friday it wasn't just the dow it was all the major averages today. all of them wiping out their gains for the year except the nasdaq which is slightly higher. the dow now wiping out 2,000 points for the year with that decline. same for the s&p 500 same for the nasdaq. and the small cap -- for the russell 2000, not the case for the nasdaq slightly in the green. we're showing you there a lot of components these are after-hours moves. by the way, the selling pressure hasn't let up, even though the 4:00 p.m. bell closed here at the nyse we're still seeing pressure on the stocks on the downside when we have these selloffs, when we sneeze, europe, asia can be far worse we saw that last night the fact we had an even worse day -- >> they will catch down to the u.s. markets as they open up i keep trying to emphasize how

fouled up mechanically the equity volatility trade, it became very big and it's still after hours. it's still fibrilating, art was talking about a heart attack i don't know how long it takes for that to settle down. that's one of of the things we're watching along with jeff talking about we're now at that point talking about, did we see a true washout? did we see this kind of indiscriminate purge, that sapz it, and then you can look at the levels to form a bottom. >> the dow was briefly down 10%. the s&p down 8%. by the way, we also like to talk about how high we've climbed since the election we've now given back a bit of that still up 32% on the dow. waiting for any comment the president might have the federal reserve now could have -- the new fed chair is an interesting spots, first day on

the job. if what you're describing played out, there's no reason for him to get involved unless this started to look extremely -- >> it's nothing that seems to be touching the banking system. anything like that that's directly under the fed's purview. just to your point about how much we've gone up if we go down to the 200-day, that's still sloping up, that defines if we're in an uptrend or not you can go down 4% from here and still say on a long-term basis you're still in the up-trend i don't know if you want necessarily to test that it's not that far away and it wouldn't be some cataclysmic move. >> you are seeing on your screen correctly, dow components moving to the down side, after hours trade under pressure as soon as we closed. let's get a check of major sectors with our team of reporters. diana olick, josh lipton surveying tech josh, let's start with you

>> since the close on january 31st the s&p 500 has lost more than $1 trillion in market cap big tech names taking a lot of that beating google, microsoft, apple have all suffered some of the sharpest haircuts. each name cutting at least $30 billion in market value. tech sector of the s&p 500 basically flat year to date. though it's still up 12% over the past six months. it's up about 30% over the past 12 months. and this weakness comes aztec has posted what strategists would describe as a pretty good earnings season. earnings growth, 21% versus the expected 15% revenue growth 15% versus the expected 12% lindsey bell of cfra says the selling isn't surprising given the run-up some tech names had in 2017. she still expects the sec store to have strong results but she points out it's trading 19 times average versus five-year average of 15. >> let's turn to housing which was suffering amid higher rates.

how did today's rout impact builders >> they're down as well. big names like d.r. horton, powlty homes but they have rallied 50% to 80% on the tax cuts, on lower interest rates last year, on all the things that helped the home builders now we're looking at much higher interest rates just over the past week and a half, two week we saw the 30-year fixed go up 55 basis points from the beginning of this year that hit the home builders hard initially. the good news today, if you want a bright side, is bond yields came back so mortgage rates didn't move. mortgage rates don't move as quickly as stocks. they basically reprice day to day. but you can imagine that by tomorrow they will have pulled back slightly or at least not moved higher as in the past couple of days the reits, a low interest rate play, which have really been hit as interest rates have been rising, they didn't get hit as hard today some down pretty hard. one specifically, simon property

group didn't do so pad badly while the rest of the market was routed >> that's a point, thank you diana olick. meg has a look at how health stocks performed. >> health care stocks is a sec store, second worst performing in the s&p as of the close of today. some pharma names the biggest drags on the dow if you look at the way johnson & johnson and pfizer closed out the day. both down more than 5% merck also down 3.7% at the close. bristol-myers down 4%. at one point johnson & johnson had a little spike lower actually on some potential concerns around litigation surrounding their talc baby powder products. they have come out and say that was overblown. you saw j&j recover and then the selloff. still down lower than other stocks bristol-myers had news today on their lung cancer program. that has been sort of mixed in terms of receptionfrom the market but still not down as much as bigger names like j&j and pfizer we'll look at the ibb year to date that's been buoyed by m&a in the

biotech space. year to date now given back the gains the biotech has given back, it's about flat for the year, guys this was a sector that had remapd relatively strong toward the end of last week in the selloff. may be balancing out a little now. back to you. >> thank you mike, so in past selloffs in periods of market pressure we've often looked at -- sometimes it's been biotech or builders or tech as the bellwether what's the bellwether here i feel like we haven't gotten our arms around it maybe the vix. the large cap pharma names, if you're down 1% on a day the s&p 500 is down 4%, the flight to quality bid is working and you're showing that it's doing what it's supposed to do, which is to basically be a little ballast in a portfolio in terms of what we're keeg off, i do think it's essentially looking at the volatility index and all the instruments attached to it. then look at how the market opens up and trades kind of on its own dynamics it's all about the kind of, you

know, tactical real-time chess game because it's really the fast kind of tactical traders are the ones who are sort of setting the price when the environment gets like this this is not as much about analyst calls and people coming in and deciding to own individual names at least on a short-term basis. >> extraordinary to see you had an opportunity throughout the afternoon when we were down 1600 to be down 6% on the dow in one session. okay, maybe if you're a retail buyer you don't get that dip, but it's sitting on the bell as it's being offered to you and yet there's still pressure on the market after hours. >> which shows you that the pressure is coming from -- on some level a forced sale again, it doesn't have to be some kind of sinister, scary thing. it's just the mechanics of this market who owns it, where the fast money is positioned. i do think, as i was saying before, this was finally an indiscriminate selloff where they kind of took a lot of stuff down, good things were happening or not, and so i do think we're still kind of in earnings season right now. maybe over the next few days we'll get back to that point

where we're going to be moving on things besides the market's own internal dynamics. >> tomorrow we have disney, chipotle, snap tapestry, the coach company, dunkin, gm. this is a tough environment to report into. do you think it had anything to do with earnings in the first place that we suddenly have a dislocation like this? >> not a lot it's actually the one thirng you can point to the only thing i would say is we really did price in and start to extrapolate a lot of earnings gains quick in january people assumed the tax windfall was going to be something that was worth paying up for in terms of valuations. but not really i do think it's going to be interesting. gm, that stock has been in freefall, down another 3.5% today. a good chance for people to focus on the results. >> by the way, dow and s&p after hours are down another -- more than 1%. you take today's 4.5% drop for the dow on top of friday we were down 2.4%, so call that 8% in two sessions, 7% in two

sessionings. now add another percent on top of that -- >> from their highs they're basically pushing a 9% drop. i'd be surprised if you didn't at this point you're so close to it, you're probably going to kiss the 10% correction level. which doesn't mean so much in the abstract. >> it's one of those things you hear people call for day after day after day. now you've been happeneded it in the period of 36 trading hours now the etfs, s&p and dow, the big proxies. s&p down 1.3%. same for the dow nasdaq just a little less than that. >> the nasdaq was interesting. it really operates a little bit of its own rules the mega cap -- amazon was positive for much of the morning. obviously, they kind of -- they move based on different flow and they showed that today >> i think we have the "fast money" guys here to join the fray guy adami and steve grasso thanks for joining us. we want to pick your brains about what we witnessed and the pressure after hours, too. >> it's tim, actually. i'm sorry.

>> i can only hope to be and look like steve grasso, who's standing nearby, by the way. >> i would say - >> tim seymour and guy >> the vix was up close to 9s 0% today. i was talking to containkaren ie green room i said the vix is up way too much or the market wasn't down nearly enough. i think maybe with the after-hours action we're suggesting sort of the latter. maybe now the broader -- >> say that again because this is really important. >> the volatility index chart closed up 89%. just to put it into context. it's a pretty significant move i'm stating the obvious. i would submit that the dow, given a 990% move in the volatility index, could have been down more than is 1100 points i'm not suggesting it should or will the after-hour trade with the nikkei down 8%, brian told me, that makes sense in what happened with volatility. >> tim, if that's the case, look, and i get -- i know in a

weird way i can get that when you tell me what's going on here i just wonder if you're sitting back and you don't have to worry about this day to day, is this an opportunity for somebody to buy certain stocks that are down 10% from their recent highs? what do you think? >> today was -- we like to say, this is not for those in the shallow end of the pool. this is a significant day on a couple levels in terms of the character of the market and where we were. we talk about the vix. we've only had one other day that was higher than this on the vix. then you go back to the downgrade in august of 2011 to get into this type of volatility environment. ultimately what has changed dramatical dramatically look, fed expectations, i don't know, as people are pointing out the market is suddenly doing some of its work for it. taking the fed maybe a little farther out of the picture bottom line is i don't think you need to jump in and do anything. i think the positions we had in this market was so extreme whether it was cash levels that were those we haven't seen for a decade, whether positioning in terms of bear/bull readings.

merrill lynch did this almost to a "t." based upon the price action we're seeing into the close in today's action, why do you need -- you need to have a list of stocks that perform fundamentally, especially those in a lower liquidity environment and one where credit might tighten. that's what you think about here >> yeah, i mean, i agree with you guys it kind of started out as a sentiment and positioning shakeout, but that seemed to snowball into something really much worse to your point, guy, i'm going to wave my normal rule on -- against quoting the vix in percentage terms >> this is a big day. >> because it is such a large move that you have to put it in some kind of context we are at these relative elevated levels that you normally see you look back, you have clusters of the vix up in this region in 2011, in 2010, basically when you had this big macro scare is europe going broke you don't have that here that's why i keep coming back to the idea it's the market's kind of own internal kind of tangling up that we've seen right here, guys.

>> yeah. >> i do have to agree. >> brian sullivan and i said this earlier today, but i'll say is it again because it's worth mentioning last wednesday brian sullivan said the market has a way of every new fed chair. you think about that his first day in office today, mr. powell think about what happened friday, obviously what happened today. this is, in fact, that test brian spoke about. i don't know if he views it that way or looking to pass or fail a test, but that's clearly what's happening. quickly i'll add one more thing. the level of complacency and tim has been speak being this for week, relative strength index -- you've written about this -- reached levels we haven't seen - >> 22-intraday on the s&p which takes you back to november of 2016 and n ekt doelecdotally, do witt you want, but i spoke to a lot of people today in the wealth world, they're very excited. i'm not sure it's time to be excited and buying that dip that everyone's been waiting for.

people have been saying, what am i going to do when i get that pull itback. you got it are you ready to buy here? what are you going to buy in an environment that i think is still very fragile >> by the way, before we go, would you agree, if the fed chair, if jerome powell were i was going to say overreact or react at all, he will be a slave to the markets for the rest of his tenure, don't you think? >> yeah. i'll say quickly, steve liesman had the same conversation. is the fed's job is to work on the economy or is it to work on the stock market and should they even be -- consider what the stock market does on a day-to-day basis i would say no but other people say differently. >> i would say the fed has been focused on the stock market the last ten years coming out of the crisis they had a couple mandates. unemployment below 10% they've done a great job they wanted to get the dow above 10,000 i think they focus on the -- >> i don't think that was in the -- in the law. >> this is 2008. but the bottom line is, i think they care about markets. they have been focused on

markets. the fact markets have allowed them to get five hikes in already is maybe a surprise. after the first one, they didn't give you you a chance to get another one. who knows. >> my point is -- i can almost understand their obsession with the stock market when it was a proxy for whether this macro stuff was going to work at all after a couple days like today, you know, feels like a different story. anyway, we have to go. thank you so much. >> thanks. >> guy adami and mr. timothy seymour. catch much more "fast money. they'll start at the top of the hour, 5:00 p.m. eastern for more on the selloff. joining us on the phone is dan niles from alpha one capital. i know you're not trading this thing -- maybe concerned about volatility the way others might be from your point of view, what just happened and what moves are you making >> sure. so, we came into today sitting on over 30% cash because we were very concerned about basically what you saw so, for us today it was, you

know, something that we expected at some point to occur bad fridays followed by horrific mondays are pretty common on wall street. as you're aware. quite honestly, i think people are sort of panicking for no reason because the question isn't, you know, oh, my god, is the market down this much in the last, you know, week that big a deal the question you should ask yourself is, should the market have ever been up thismuch in january january? if you look at the numbers that have come out, not all have been great. apple, the most valuable company in the world, we were short their stock into their earnings. we expected horrible earnings. they were worse than we thought. we ended up covering that because we took advantage of that and rates have moved higher. we've been lucky in that there haven't been more signs of inflation. quite honestly, that's what people have been using to justify the market having these valuation levels is, well, interest rates are really low -- >> there's no inflation. >> now you're figuring out, gee,

when you get to close to 3% unemployment dropping below 4%, there's obviously going to be some inflation that shows up it's just a matter of when so, you know, we're not that concerned about it we actually put some of our cash to work. now we're somewhere in the 20 and change, 25% and change rate. >> so, you're a buyer on this selloff, just to be clear? >> yes. >> you're buying into this weakness >> yes especially toward the end of the day when we saw the market collapse, we were like, okay, this is getting to the point where we think things make more sense. the only way you can really invest versus gamble is when people are worried about losing money. and up until now, people have thought it's been a free ride, you know, for the last 14 months the s&p has never gone down. it hasn't had a down month. >> right, right. so, can you give us some examples of what you are n nibbling at, dan >> sure. this is related to our alternative investment, obviously, mutual funds, they always have to be along. that doesn't matter. but the things we were nibbling

on in our alternative investments, we bought some apple today. we think when they go ahead and they have their appear results, they talked about the capital return, they've said they're going to take their $160 billion to neutral we think the markets neutral we think the markets will reward a 20% in ets if they bought back all of their shares, which obviously they won't that gives you some floor underneath it. we think that's relatively interesting. we nibbled on some intel we think that data demand is pretty strong. we think they probably get more share with apple it's great when apple and qualcomm are suing each other. it's probably not good for their relationship we think intel is going to pick up some share with apple towards the end of this year >> okay. >> we bought some jpmorgan because we think they're in fantastic shape. jamie dimon is, in my opinion, the best investment banker in the entire world he proved that during the

financial crisis rising rates help. those are some things we started nibbling on. we still are sitting on 25% or so, don't know the exact number, but in cash so we still think there's some more down side. we'll continue to look to deploy that in the names we like as this goes forward. >> dan, i know this isn't necessarily the way you were trying to project or predict things but, you know, you were trading the late '90s. today felt like one of those snowball selloffs we got in the late '97, '98. those were for way different causes before this you had one of those huge liquidity driven moves to the up side, a quick v down to these lows and you recovered them relatively quickly i'm not saying that something like that is going to happen again, but i wonder if that's within the range of your possibilities of what you're gaming out how this goes from here or do you think we're just kind of sideways and you have to pick the names that are going to

work >> yeah, you bring up a really good point i do view this more as something where you have a lot of excesses, you come down. i don't see a v-shaped recovery because i think people got too complacent in what you said in the fact that the markets would never go down so you didn't really need to worry about it. i think at this point you need to start picking stocks which is a good thing because it means, you know, you're not going to have these violent selloffs that people are actually worried about losing money and so i think you have to go in and pick things i think there's going to be, you know, some more down side in certain sectors where the valuations have gotten way too high semiconductors i think i've been on cnbc i don't know how often that they've run too much. there's certain sectors i'm not as thrilled with, but i do believe it's more of a sideways market versus a violent v-shaped rally back up. >> thank you again for your time telling us some of the moves you're making.

>> my pleasure, kelly, thank you. dan niles with alphaone capital partners the dow dropped down 1600. at the close it was down 1175. is there still value to be found in this environment or is this the perfect value environment? let's ask michael zin. also michael over at james investment research. barry, what do you think are these games days a gift for you if they're not connected to fundamentals or how are you assessing it >> we thought we were in a topping market there's probably going to be a turnover from the high growth stocks to the more value oriented stocks. this is another black monday, kind of like the black monday of 1987 some similarities. no recession in sight. very high valuations and a new product called the s&p 500 index was the hot dot back then. we've seen a similar pattern

now. we would say stay away from those expensive stocks stay away from the ecommerce types of stocks. where you're going to find the opportunities are in cheaper companies with earnings and they've been performing relatively well. some in the tech area, cheap company, western digital raidian does the pmi insurance we also like the gold, either etfs which are real gold or american barrett those are some opportunities i wouldn't even bye pass -- >> the selloffs always bring out the gold bugs. >> for a while now. >> from a valuation point of view michael zin, what about you? first of all, what do you think is going on in the market here and what moves are you making? >> i would say one of the lessons from today is always be ready for bad news for sure. you never want to lose a game of nerves in the market i think what you want to do is sort of inspect where the trends are and see whether they're still intact or not. i would certainly say that they are, and i think what you want to do following that --

>> what trends are you referring to >> well, on the s&p and broad basic up trends of the market. i think we have a lot of room before we go back. >> you do? a lot of people feel like there's not a lot of room and we've climbed a lot and predicated on a lot of things going on maybe now inflation is higher, wages, but you think it's also still intact >> yeah. michael said earlier, this correction today and the last couple of days have occurred in a vacuum you have not seen it confirmed by any of the other big asset classes. >> the ten year did move up. overnight we were almost at 2.9%. >> not today. >> going back to friday morning's numbers. >> yeah. i think some of that's there i think some of that pressure may have come from oil, may have come from weaker dollar. maybe that abates a little bit you certainly did see f fed expectations move back down. we were sort of a lock for march. i think now that the 2 versus 3 versus 4 debate is still now -- >> do you place any credence on

that >> well, i think the good news about market support for that is the fed built in an expectation. the market now i think may be even dabbling in the 4 area of rate hike. now we have room for it to come back i think that's positive. so i would go ahead and i'd look at sort of the high mode, high margin good management industries we see them in industrials, we see them in tech i would pick on some of those. i see some bargains there. >> barry, you mentioned that in making the comparison to 187, no recession in sight then or now just how much damage do you think can get done to the overall stock market if there is not an imminent recession and corporate profits -- i mean, it would be hard to get them not to grow double digits this year do you think we can kind of just have one of these years where the valuation compression is so much that we get not much up side in the overall market or do you feel like we actually can

recover from here and maybe revisit the highs? >> those are great questions if we look back at history, the 13 last times that the market fell 15% or more, almost half the time there was no recession in sight, so it really isn't relevant at this point, you know, that you can't have a downturn without a recession this town turn today, this sharp selloff today came at the beginning of a setback, not at the end. in 1987 that was the end not a buying day this is not the end. when you see the cyclical pe this high, once it starts the prices coming down and gets back to a normalized level, we think that's probably the path that we're on we have a tax cut and historically they're very good for the markets long term but in the year after they're not very good we haven't had great results we're kind of in that never never land it's been really good news all the good news is out this is a normal correction but

it could be a lot deeper and more painful than people are anticipating. >> michael, one more thing it's an area here that you like that barry sounded a little less fond of. internet services, i don't know if you can give specific names can you talk about why the valuation isn't a concern? >> that's a good question. it is a long-term growth story and long-term growth stories do suffer a little bit. you get a higher discount rate when you think about the barriers of entry, the levels of growth in those areas particularly and particularly to what's going on fiscally now, now you're talking about capex, business cycle, amortization and accelerated. those kinds of productivity enhancing areas will do well. >> i want to show everybody back to your screen what's happening here in the after market hours caterpillar, for example, down 1% and that's after everything that's happened today. as soon as we closed things up here at 4:00 p.m., the selling pressure didn't let up it kind of kept going. you can see a lot of the components of the dow and s&p

are moving to the down side. we've heard pressure over seas and not unusual that that's going to happen. i'm wondering, we're hearing names everybody is looking to buy. when are we going to kind of see that rubber hit the road >> well, there clearly was selling pent up into the close and the volatility markets have not calmed down. it's the indexes that are still kind of jerking around after hours. so that seems to be what's pressuring things. don't know how long that lasts i will say, you know, the dow has been the under performer in this move down because it was the out performer on the way up. it's the caterpillars, boeings that have very stretched valuations and that's where you have a lot more air. >> michael and james, thank you. some investment firms reported they were suffering outages as the markets plunged today. leslie picker, tell us more. >> t. row price writing in a tweet today we sincerely regret the website outage

there were outages among a variety of investment firms. they haven't confirmed those outages like t.rowe has. dow jones reported that customers were unable to log into their vanguard accounts so obviously a byproduct of some of the selling that we're seeing today. back over to you >> thank you, lessee we're done here on closing bell but we're not done today there's a special tonight on today's market turmoil there you have it. 7:00 p.m. eastern. stay tuned "fast money" begins right now. today was one of the most incredible days in stock market history and a very bad day for most investors we lost a lot of value the dow posting its biggest point drop in history. at one point the dow was down nearly 1600 points and entering a correction it came back a bit but it still ended the day down