Markets Brace For Ebola Breakout

One of the scariest books I
ever read
was The Hot Zone by
Richard Preston. Preston tells the terrifying and true
story of an
Ebola virus outbreak in a suburban Washington, D.C. laboratory, with
descriptions of frightening historical epidemics of rare and lethal viruses.
While the Ebola virus
was named after a river in the Democratic Republic of the Congo, we’re not
certain exactly where its natural habitat (known as the “natural
reservoir”) is located.

In the final stages of the disease, the infected animal or human bleeds out
of every orifice. After reading the descriptions, and when the hair on
the back of your neck calms down, you’ll probably agree that Ebola is one of
the most deadly diseases on the planet. Since the stock market has been on the
verge of its own version of an Ebola outbreak, I thought the comparison might
do all of us some good.

Earlier, in what was formerly known as a triple witching Friday, it seemed we
were in danger of bleeding out as well. I say “formerly known as triple witch”
because since the S&P futures and futures options expire on the opening
print rather than on the closing print, the event no longer has the
concentrated effect that it once did. However, given the tremendous fear of a
“bleed out,” you couldn’t buy a put or sell a call for most of the first
hour of trade, as panic swept through the markets yet again.

Now, I can’t tell you where the “natural reservoir” is for this bear
market, but I can tell you that the trend has always been and is still your
friend. That trend remains to the downside, so be extremely selective with
your buys, unless you’re buying puts!