Just today, we got a glimpse into the future as multiple Italian stocks were halted. It's a binary market - one day stocks are going up for the umpteenth day in a row, the very next day, limit down. And these "circuit breakers" do nothing to restore confidence as they remove liquidity from the markets and force investors to dump other assets to raise cash. Zerohedge pointed to the recent declines in gold as likely being correlated to the Apple collapse.
The real issue is that so many volatility sellers have been selling volatility at low levels that there won't likely be any put option sellers around when the VIX spikes. That's a very similar situation to what happened during the 1987 crash vis-a-vis the "portfolio insurance" product i.e. it did the opposite of what it was intended to do - it accelerated the selling into the decline.
In any case, we are not likely to get too much more of a warning that when things come unglued worldwide, it will be fast and ugly.
