Wednesday, October 14, 2009

Volatility Index Falls Below 23 to a 13-Month Low

The CBOE Volatility Index (VIX) fell below 23 yesterday (to 22.99) for the first time since September 3, 2008, and fell again today to close at 22.86. From the high of 80.86 on November 20 of last year, the VIX has fallen by a full 58 points, and is back to the pre-financial crisis level. Just another indication that the worst is behind us.

6 Comments:

At 10/14/2009 7:46 PM, Anonymous Benny The Real Man said...

I know it is just a number, but 10,000 on the Dow will provide mental solace to millions of ordinary American investors.
It will be a boost to confidence--a signal that we did not collapse, that (thanks to Bernanke, Geithner, Summers) we are resilient. Listen, these guys are serious about their craft--it ain't the Gong Show like the Bush team.
China may elipse the USA in the next 20 years, but I still think the United States will prosper--in fact a cheap dollar may be good for us. Keep printing the money, Ben Bernanke--let those printing plants hum 24/7 until the plates melt!

 
At 10/14/2009 7:58 PM, Blogger BMWright said...

Interesting to note how the VIX was hitting 20 back in Aug. 2008 even after FRE, FNM and AIG had collapsed (I believe) a few weeks earlier and the market had already had one full year of decline. The panick offered just about three to four months of money making shorting and opportunity to go long the VIX.

Dow 10,000 makes this the biggest 8 month advance in our lifetime. This advance greatly exceeds the 2003 advance and yet, oddly the economy is in much worse condition and unemployment is about 50%-60% higher and job losses are more than double.

 
At 10/14/2009 10:25 PM, Anonymous Steve said...

Another good sign that the market will continue to rally. I like the earnings season for moving the markets higher for the next 3-4 weeks.

 
At 10/14/2009 10:40 PM, Anonymous Anonymous said...

This indicates that the best name for what happened is the panic of 2008 just like its twim 101 years earlier. Both involved runs on "banks" this time it was money market funds, after reserve broke the buck. Then MM funds stoped buying commercial paper and the downward spiral started just like 101 years ago a credit crunch dried up wall street lending. Panics occur when everyone is convinced the sky is falling.

 
At 10/15/2009 9:56 AM, Anonymous gettingrational said...

Yesterday I came across a contraian VIX speculation. He says that the panic will be to the upside and not the downside of the U.S. market. The idea is to buy VIXs because people will be rushing to buy equities rather then sell and fear missing out on money to be made.

 
At 10/16/2009 7:58 AM, Anonymous geoih said...

"Just another indication that the worst is behind us."

Another way to read it is that we're just about ready for another crash.

P/E ratios are climbing and already high. The money supply has been drastically increased (can you say inflation). Trillion dollar government deficits and the world running away from the dollar. A still shrinking economy with no job growth.

All the people who saw the last crisis coming are saying get out of the stock market.

 

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