Friday, May 07, 2010

VIX Redux redux.

The VIX, as the Chicago Board Options Exchange Volatility Index is known, rallied 6.1 percent to 34.81 at 12:30 p.m. New York time to extend yesterday’s biggest gain since September 2008.

We just want to point out that a VIX at 34.81 is nothing spectacular, and that common sense suggests that the sort of fear that would accompany the possible disintegration of the Euro, a 10% fluctuation on the Dow, the threat of a global debt contagion bigger than the global financial crisis of 2008, etc. would suggest a substantially higher VIX. A redline, in fact.

In other words, until and unless that redline occurs, there is no VIX confirmation that any storm has passed. In fact, at these levels, the VIX is merely registering a few scattered raindrops.

For more info on the VIX, just search this blog for other posts.


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