Market Fear Gauge Not at Panic Levels
The CBOE Volatility Index (VIX), which is often used as a proxy to measure the amount of fear in the market, is elevated following Tuesday's sell-off, but nowhere near levels that have traditionally signaled capitulation.
The VIX rose 14% on Tuesday to 27.27 from 23.87 on Monday following a 4.3% decline in the S&P 500 index, its worst day since June 2020. The 14% rise in the VIX is relatively small given the large decline in the S&P 500 which ranks among the top 10 worst daily showings in the last ten years.
Market bottoms often occur when the VIX rises above 30 (and often well above 30). The most recent S&P 500 bottom of 3,666.77 on June 16, a decline of 24% from all-time highs, came just days after a closing VIX peak of 34.02 on June 13.
Markets are set to rise slightly on Wednesday following a lower-than-expected headline year-on-year PPI number for August (despite hotter than expected core numbers), an indication that inflation may not be quite as problematic as Tuesday's CPI data indicated.
Treasury yields continue to rise though (the 2-year is at levels last seen in 2007) and are worth keeping an eye on along with the VIX. Stock traders may want to keep tight stops on their long positions if fear continues to build in markets.
The views and opinions of Mooney Navigator are those of the author who is not an associated person of Moomoo Financial Inc. The view and opinions of the author do not reflect the views of Moomoo Financial Inc. or any of its affiliates. The views and opinions of the author are provided for informational purposes only, do not constitute a recommendation of an investment strategy or to buy, sell, or hold any investment in any form, and are not research reports and should not be used to serve as the basis for any investment decision. All investments involve risk including the loss of principal and past performance does not guarantee future results.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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Johnnie Worker : $CBOE Volatility S&P 500 Index (.VIX.US)$ A good indicator that is so unique in the US stock market. Hope we can have something like this in SG or HK market, to give us some good hints on market timing
Johnnie Worker : Still I believe the valuation is important tho, when u have cheap stocks with low sentiment, u know it’s time to enter
Dons hobby Johnnie Worker : 1000% agree
imaginative Puppy_56 : Amazon is expending into health care and research bio-labs and rumors are they will buy ADTX.
YSY0714 : VIX entrance opportunity