S&P 500 making new highs but VIX is basically flat - Warning???
I am not a market expert, but based on what I understand this is typically not a good sign. Especially so when it is hovering right around the 30 level. Over the past several weeks news highs made a noticeable reduction in the VIX. The few lines I pulled from Investopedia (see below) seem to fit the situation pretty well IMHO.
I know, don't fight the Fed, but the market is different now than just a week or two ago. Since the bottom, I totally understand the bull run. Cheap stocks with lot of liquidity from the Fed. However, volume is way down and VIX is not falling like it was. I honestly do not know what to expect. I am just patiently waiting to see how things play out as May ends and June gets underway.
investopedia.com/articles/optioninvestor/09/implied-volatility-contrary-indicator.asp
While it is rare, there are times when the normal relationship between the VIX and S&P 500 change or "decouple. ... ... ... This is common when institutions are worried about the market being overbought, while other investors, particularly the retail public, are in a buying or selling frenzy. This "irrational exuberance" can have institutions hedging too early or at the wrong time. While institutions may be wrong, they aren't wrong for very long; therefore, a decoupling should be considered a warning that the market trend is setting up to reverse.
investopedia.com/terms/v/vix.asp
Created by the Chicago Board Options Exchange (CBOE), the Volatility Index, or VIX, is a real-time market index that represents the market's expectation of 30-day forward-looking volatility. Derived from the price inputs of the S&P 500 index options, it provides a measure of market risk and investors' sentiments.
I know, don't fight the Fed, but the market is different now than just a week or two ago. Since the bottom, I totally understand the bull run. Cheap stocks with lot of liquidity from the Fed. However, volume is way down and VIX is not falling like it was. I honestly do not know what to expect. I am just patiently waiting to see how things play out as May ends and June gets underway.
investopedia.com/articles/optioninvestor/09/implied-volatility-contrary-indicator.asp
While it is rare, there are times when the normal relationship between the VIX and S&P 500 change or "decouple. ... ... ... This is common when institutions are worried about the market being overbought, while other investors, particularly the retail public, are in a buying or selling frenzy. This "irrational exuberance" can have institutions hedging too early or at the wrong time. While institutions may be wrong, they aren't wrong for very long; therefore, a decoupling should be considered a warning that the market trend is setting up to reverse.
investopedia.com/terms/v/vix.asp
Created by the Chicago Board Options Exchange (CBOE), the Volatility Index, or VIX, is a real-time market index that represents the market's expectation of 30-day forward-looking volatility. Derived from the price inputs of the S&P 500 index options, it provides a measure of market risk and investors' sentiments.
منشورات ذات صلة
إخلاء المسؤولية
لا يُقصد بالمعلومات والمنشورات أن تكون، أو تشكل، أي نصيحة مالية أو استثمارية أو تجارية أو أنواع أخرى من النصائح أو التوصيات المقدمة أو المعتمدة من TradingView. اقرأ المزيد في شروط الاستخدام.