Do you pay attention to market volatility or monitor the level of investor fear? Traditionally, the VIX (CBOE S&P 500 30-day volatility index) has been investors' main tool for measuring market volatility. The higher the VIX, the more investors are worried about a down move in stocks. But now, investors have several tools available to them for tracking volatility. In fact, the CBOE recently launched to new S&P 500 volatility indices to go along with the VIX and the VXV (S&P 500 3-month volatility). With the addition of the VXST (9-day volatility) and the VXMT (6-month volatility), the entire volatility term structure of the S&P 500 can be tracked. The term structure is generally a much more informative measure of volatility than any one metric, and the shape of the curve may tell you a lot about how investors feel about the stock market. (VIEW LINK)
I'm an investments analyst for a US-based independent investment research firm. My focus is on economics, options, and all types of stocks, but especially tech, Internet, and renewable energy companies. I have experience as a options market...
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At least part of the move higher seems to be based on analysts expecting better Black Friday results. While the results weren't bad, they aren't as good as hoped. So, a bit of investor fear may be creeping into the market or investors could be adjusting expectations to take into account expected lower earnings next quarter.
Jay - I was just discussing the sharp move in the VIX with James Marlay and what it means. Do you have a view?