Black October continued to get worse overnight as US equity futures are trading limit down in the pre-market. While we've had our share of bad days this month, today looks to be the worst. Below we have reposted the circuit breaker levels for the New York Stock Exchange. While most people think a 10% decline causes the first round of circuit breakers to kick in, that is not quite the case. The circuit breaker level is reset at the start of every quarter, and at the start of this quarter the Dow was at 11,000 making the first threshold 1,100 points. Based on yesterday's closing level, an 1,100 point decline in the Dow is equal to a drop of 12.6%. In order for the second round of circuit breakers to kick in, the Dow would have to fall by over 25%.
The comments that best summarize the feeling this morning came from a New York Stock Exchange spokesperson who said that the exchange will open for trading today. The fact that he even had to address that question tells you how bad it is out there. Weeks ago, when Russia and other less developed countries were closing their markets, there was a feeling that it couldn't happen here. We're now getting awfully close.