Wednesday, December 5, 2012

VIX Rising But Still No Worries (Yet)

by Dan Norcini
Trader Dan Norcini

The Volatility Index or VIX, is a useful index for measuring investor/trader sentiment in regards to the broader stock market’s health. It reflects option premiums and is therefore a decent way of peering into the thinking of those who write the things and what they are expecting/fearing in the immediate future. As with any market index, it has its shortcomings but all in all, it is remains a good gauge of sentiment.
While the following chart is not scientific it is helpful in understanding the impact of the Federal Reserve’s monetary strategies over the past few years. I prefer to look at this chart as a demonstration of official monetary sector meddling into the affairs of capitalism/free markets.
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