The CBOE Volatility Index, or the VIX or the ‘fear index,’ has been rolling over and dying because of the rally we have seen over the last five-week period. The DJIA is currently back at 8,000 and the S&P 500 is almost flirting with 850 again. Whether or not the VIX is dead will depend on how stocks act from here on out, but we are currently looking like we are going to have set a consecutive gain of 5 weeks in a row if the levels all close today at these current levels. Here is the graphic from Stockcharts.com:
For long-term investors, this is great if it can continue. It also generally makes it cheaper to use options for hedging or for speculation. The VIX almost always performs inversely with the market. A reading under 40 is actually still very high on a historic basis. A reading of 37+ today puts this back way off of the old fear levels. Let’s just hope the lack of fear does not become complacency.
Where is that long awaited VIX ETF when we need it?
Jon C. Ogg
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