Paul LaMonica, (CNNMoney.com) -- Be not afraid, investors. For now at least.
A sense of calm seems to be descending over the markets lately. Stocks surged in July and soared again on Monday, the first trading day of August.
As stocks have marched higher, an index widely cited as Wall Street's fear gauge, the CBOE Volatility Index or VIX, has steadily fallen as well. The VIX is currently hovering around 22.50, its lowest level since early May.
But anyone concluding that the drop in the VIX means that investors are no longer fearful could be in for a rude awakening. All that the VIX is telling us is that investors aren't afraid right now. It's not, however, a good measure of future investor agita.
Consider this: when the VIX was last this close to 20, it was back on Monday, May 3. Just three days after that on May 6, we were hit with the mother of all fearful market panics. The Flash Crash, as it has since come to be known, wiped out about 1000 points off the Dow in a matter of minutes before recovering a bit. (more)
No comments:
Post a Comment