So much for that relief rally.
The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is trading deep in the red once again today, down a whopping 1.5% and more than wiping out all those beautiful gains that were made on Wednesday. It's also hit a fresh seven-month low of just 5296 points – a long way off its high of 5996 points back in April.
Although some companies have managed to buck the trend, including Newcrest Mining Limited (ASX: NCM) and Wesfarmers Ltd (ASX: WES) after its earnings report, the vast majority of ASX-listed entities are trading lower in what can only be described as a 'bloodbath'.
Once again, it's the banks doing plenty of damage with Commonwealth Bank of Australia (ASX: CBA) down 2.4% after hitting a fresh 10-month low earlier in the session. Meanwhile, Australia and New Zealand Banking Group (ASX: ANZ), Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd. (ASX: NAB) are down 1.7%, 0.7% and 1.2%, respectively.
Australia's biggest miners are also dragging the market lower after what was another horrendous night for commodity markets. Iron ore recorded a 0.9% fall with further pain anticipated over the coming months, but it was the heavy fall in oil prices causing the carnage.
As it stands, Brent oil is trading for US$46.90 a barrel after tumbling 3.9% overnight while West Texas Intermediate (WTI), which is the US benchmark, fell 4.3% to just US$40.78 a barrel. To make matters worse, Citigroup says it is 'conceivable' that that price could fall to just US$32, according to Fairfax, which would create havoc in the energy sector.
Arguably, it already is causing havoc based on the movements in the sector today. BHP Billiton Limited (ASX: BHP) is down 2.8% while Woodside Petroleum Limited (ASX: WPL) and Santos Ltd (ASX: STO) are down 3.3% and 6.2% respectively.
The agony doesn't stop there.
Senex Energy Ltd (ASX: SXY), Oil Search Limited (ASX: OSH), Liquefied Natural Gas Ltd (ASX: LNG) and Origin Energy Ltd (ASX: ORG) are all down between 5.3% and 13%. With further falls expected, investors may want to avoid this sector altogether.
Indeed, nobody likes to watch their portfolio tumble in value, so these days can be truly testing for even the most experienced investors. But while some investors are selling out in a state of panic, the smart investors are simply sitting on their hands waiting for the storm to pass (or else, they're out there buying).
Unfortunately however, there is no way of knowing when that will happen. Sure, the market could rebound and hit 6000 points by the end of the year, or it could continue to crumble over the coming weeks or months.
The point is, it is simply impossible to predict with any accuracy where the market will go from here, so while now could be an excellent time to stock up on high-quality companies, it is equally as important to ensure you are prepared for even more volatility.
