Displaying items by tag: vix
A little under a month ago the VIX spiked dramatically due to bitcoin reverberations in tech markets and macro inflation trends, and it's trending…see the full story on our partner Positivly’s site
January and early February offered some rough times for investors. The two-week meme stock debacle had most investors’ hearts skip a beat...view the full story on our partner Magnifi's site
Markets have been rough for the last few weeks. Investors are doubting the pace of the recovery because of a big renewed rise in cases and the possibility of new lockdowns. And according to market analysts, signs are increasingly pointing to another meltdown. If you study various volatility indexes, starting with the VIX, it is becoming clearer that another big move lower is on the horizon. The VIX and other indexes have recently shot back higher after a steady fall after the huge March volatility and their momentum indicates investors may panic sell and create another big correction.
FINSUM: We do not give much respect to technical analysis on its own, but it is useful (in our opinion) as a tool to quantify what one is seeing in the real world. Right now, this makes sense given the rising worries about new cases and lockdowns.
At this point it might seem natural to think that the stock market simply rises a bit everyday. Stocks have been so steady and so quiet for so long that it is almost disconcerting. The current “quiet” streak is one of the longest ever. The current number of days without a 1% move is the sixth longest streak since 1969 and the third longest since 1995. One analyst described the situation this way, saying “Right now it’s very, very tough to fight this trend … There’s a reinvigoration in the idea that we will see better growth”.
FINSUM: The huge rise in stocks from the Crisis through the last decade was generally characterized by steadiness. We don’t see this as any surprise.
If one thing is for sure about markets at the moment, it is that investors are less worried about the economy and less stressed about the chances of a bear market. That is exactly why the market is at risk. The market’s fear index, the VIX, jumped a whopping 16% yesterday, signaling some underlying anxiety building after a calm and positive stretch. One of the factors that is looming over markets is whether the tariff deadlines on China get delayed or not, which will be a sign of progress or failure on the trade deal. Further, fears over the election, and higher rates, are likely to dampen corporate spending and slow the economy.
FINSUM: Our worry is that the anxiety level at the moment does not seem to be matching the real risk, which ironically is when the chance of a market downturn is at its highest.