The last 48 hours have shown investors how potentially dangerous effects may be caused by the growing role of ETF / ETNs. One of them virtually zeroed the capital for its investors yesterday and may have deepened Monday's drops on the New York Stock Exchange. As we remember, on Monday, there was a real "slaughter of bull market" on Wall Street. After two years of practically non-stop increases, Dow Jones slumped by 4.6%, and the SP500 plummeted by 4.1%. The very correction of strong gains from recent months with almost record high valuations of shares was no surprise. Moreover, some of the US government officials commented that it was indeed an event long awaited and desirable.

What surprised investors the most was the unprecedented "speed" of the market. At the end of Monday's session, the declines suddenly accelerated - in several minutes, Dow Jones lost almost a thousand points, for a moment dropping by more than 6.0%. The stock prices were changing so fast that the human eye could not keep up with their changes. It was almost like a repetition of a sudden crash in May 2010.

The culprit of Monday's sell-off on Wall Street is ETN called VelocityShares Daily Inverse VIX Short-Term ETN (XIV). It is a fashionable American instrument that allows you to earn a drop in volatility. Its value changed in the opposite direction from the VIX index, an index built over a quarter of a century ago measuring the implied options volatility of the SP500 index. In America, they call it the "fear index" because option prices grow as investors fear increased volatility. And volatility grows when stock prices are falling (usually falls in stock markets are much more rapid than increases). The VIX index went straight down from its highs and erased seven years of gains in one day.

Let's now take a look at the Dow Jones technical picture at the H4 time frame after the 48 hours of the drops.The market did not manage to retrace above the key technical resistance at the level of 25,240 and the price reversed. The momentum is still weak, but the market conditions are extremely oversold at this timeframe. The next support is at the levels of 24,893 and 24,690.