We are just eight trading days into 2016, and it is already one of the worst yearly performances in quite a while – down -7.5%.  The next two days will be critical, however, in determining if this is a trend or another speed bump in an already rocky market.

Using the S&P 500 as a gauge, we are down to levels that are consistent with last August and September, but just above those lows.  We are also at a level on the VIX – the indicator of future volatility – that is in line with September, when the market turned back around during the following four weeks.  It is NOT at the levels that we saw in August when there was real concern that the global markets were on the verge of collapse.

Put simply, this is not a market meltdown in the ways that we saw in 2008.  It is disconcerting, and on the heels of a very volatile and depressed 2015, it may be enough to push investors to be done with equities.  There are two core drivers of this market decline – China and Oil. China may very well be slowing down, but the reaction to these indications has been exacerbated by borrowed money and the interference of the Chinese government in the market. Similarly, oil prices will continue to drive many failures in the energy market, but the fundamentals shaping the low prices cannot continue for much longer.