The higher the VIX Index, the higher the fear, which, according to market contrarians, is considered a buy signal. Of course, the reverse is also true. The lower the VIX, the lower the fear, which indicates a more complacent market. Chart 1: The link between the S&P 500 and the VIX ...
While it's rare, there are times when the normal relationship between VIX and S&P 500 changes or "decouple." The chart below is an example of theS&P 500and VIX climbing at the same time. This is common when institutions are worried about the market being overbought while other investors, ...
The VIX chart generates vertical spikes that reflect periods of high stress, induced by economic, political, or environmental catalysts. It’s best to watch absolute levels when trying to interpret these jagged patterns, looking for reversals around big round numbers, like 20, 30, or 40, and ...
• Market volatility: measured by the VIX index. Low volatility reflects greed and market calm, whereas high volatility signals fear and rising uncertainty. • Junk bond demand: the spread between junk and investment-grade bonds. Tight spreads show greed with strong demand for risky bonds, whi...
Election years tend to bring similar levels of equity market volatility until October, when there is a noticeable uptick in the Volatility Index (VIX). But, since 1984 there has only been one election year where the market was lower 12 months after the election: that was in 2000 amid the ...
The VIX fix BY LARRY WILLIAMS TRADING Strategy A“synthetic” VIX calculation can be used in any market to reproduce the performance of the well-known volatility index. FIGURE 1: SYNTHESIZING THE VIX The behavior of the actual VIX (middle) and ...
VIX index value over time Source: CSIA calculation based on Morningstar Direct data, as of April 30, 2021. During times of high market turmoil, the VIX has tended to rise. The chart above shows the VIX index moved steadily higher as the market approached the peak of the late 1990s techno...
2 shows how US broker dealer leverage is closely associated with the risk measure given by the VIX index of the implied volatility in S&P 500 stock index option prices from Chicago Board Options Exchange (CBOE). The dark squares in the scatter chart are the observations after 2007 associated ...
Today, as we revisit that chart, it’s clear that the S&P 500 has been unable to break through this yellow resistance line and continues to trend downward. Zooming in for a shorter-term perspective, we can see more clearly how the index has fallen out of the uptrend wedge channel it had...
Specific technical indicators, such as the Volatility Index (VIX) and sentiment surveys, can provide valuable insights into the psychological state of the market. The VIX, often called the “fear index,” measures the implied volatility of S&P 500 index options. During periods of market turmoil,...