Thread: Markets extremely bullish... not a good sign...

Markets extremely bullish... not a good sign...

Look at the VIX... lowest volatility in years... very scary.

VIX - CBOE Volatility Index

1) VIX- A volatility index for the Chicago Board Options Exchange, known by its ticker symbol VIX. It is calculated by taking a weighted average of the implied volatility from eight calls and puts on the S&P 100 index.

2)The VIX measures the volatility of the U.S. equity market. Many investors say that if the VIX goes above 35, it signals a bottom in the stock market.

3) VIX and Stock Market behavior: While there are other factors at work, in most cases, a high VIX reflects increased investor fear and a low VIX suggests complacency. Historically, this pattern in the relationship between the VIX and the behavior of the stock-market has repeated itself in bull and bear cycles. During periods of market turmoil, the VIX spikes higher, largely reflecting the panic demand for OEX puts as a hedge against further declines in stock portfolios. During bullish periods, there is less fear and therefore less need for portfolio managers to purchase puts.


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