Monday, December 28, 2009

VIX Below 20 for 3 Days, 1st Time Since May 2008

The CBOE Volatility Index (VIX) fell below 20 last week for the first time since August 28, 2008, almost sixteen months ago, and closed below 20 for three days in a row for the first time since late May 2008 (see chart above). See Forbes story below:

CHICAGO (Reuters) - The VIX, Wall Street's favorite measure of investor anxiety, ended last Tuesday (Dec. 22) at the lowest levels since before last year's implosion of Lehman Brothers sparked the worst financial crisis in more than 70 years.

The decline in the Chicago Board Options Exchange Volatility Index, which came as the Standard & Poor's 500 index hit a 14-month closing high, underscores how the fear that gripped markets throughout late 2008 and early 2009 has dissipated in favor of a sunny outlook for 2010. "As investors gear up for year-end, they only see good things for the first quarter of 2010 and, as such, see fewer swings in the stock market," said Andrew Wilkinson, senior market analyst at Interactive Brokers Group.

6 Comments:

At 12/28/2009 1:15 PM, Anonymous morganovich said...

i'm never sure what these VIX posts are intended to mean.

vix is not a very useful indicator. it's always low at market tops, but can be low for a long time beforehand. a low vix doesn't mean much.

a very high vix shows you there is panic, but that's about it.

 
At 12/28/2009 1:41 PM, Blogger Size said...

I'm as unsure as Morganovich. What's the point of these posts, professor?

 
At 12/28/2009 2:33 PM, Anonymous gettingrational said...

A higher VIX, according to what I have read, can be panic to the downside and upside of the market. A weird phenomana recently has been traders short selling the VIX. This has driven the VIX lower because "fear" of calmness in the S&P for the near future!

 
At 12/28/2009 4:49 PM, Anonymous Lyle said...

Actually it works as a measure of panic, the higher the vix the higher the level of panic/fear. If you look at the fear level it peaked when the vix peaked. Now shorting the vix is taking part in the great casino, where bets are taken on almost anything. IMHO this should be moved from Wall Street to the Las Vegas strip let the casinos sell vix options. (At least then you are sure you will loose at the start)

 
At 12/28/2009 6:34 PM, Blogger Webutante said...

When the VIX goes down to this level, the smart money runs....or Sell, Sell, Sell....

 
At 12/29/2009 10:58 PM, Anonymous Steve said...

The volatility index will probably drift lower this week with the low volume being trading during the holiday week.

 

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