The VIX, also known as the fear index, is calculated from the price of options, in other words the cost of insurance against shifts in the market. When investors are willing to pay more to protect themselves, it means they are worried about the near future.
Currently, and since a few months now, the evolution of VIX can be described on the following two points :
- the last peaks (3 to 5) are decreasing in amplitude, as shown by the downside blue trendline
- the last low points are getting higher since August, starting almost from the all time low (10.28)
Thus, the VIX is converging to a very restricted area around 15%. A change in that situation will probably help the
SPX
to leave its current congestion near 2150 pts.
At the same time, we must be careful to the following levels :
- 16.50% : everytime it is passed, we notice a short term correction on the global markets.
- 20% : this is the intermediary fear level. Above this one, the markets get pretty nervous, as it was the case in February (low oil prices) or in September 2015.
When these two levels of implied volatility are passed, there are great opportunities on stock markets to pick interesting stocks. Keep a close eye on it.
Currently, and since a few months now, the evolution of VIX can be described on the following two points :
- the last peaks (3 to 5) are decreasing in amplitude, as shown by the downside blue trendline
- the last low points are getting higher since August, starting almost from the all time low (10.28)
Thus, the VIX is converging to a very restricted area around 15%. A change in that situation will probably help the
SPX
to leave its current congestion near 2150 pts. At the same time, we must be careful to the following levels :
- 16.50% : everytime it is passed, we notice a short term correction on the global markets.
- 20% : this is the intermediary fear level. Above this one, the markets get pretty nervous, as it was the case in February (low oil prices) or in September 2015.
When these two levels of implied volatility are passed, there are great opportunities on stock markets to pick interesting stocks. Keep a close eye on it.