Volatility $VIX Dips, Is It Setting Up For Another Surge?
The CBOE Volatility Index (VIX) traded down to 11.03 on April 17, 2019. That was the lowest the VIX had declined since August 9th, 2018 when it fell to 10.17. Many traders and investors view the VIX as a fear gauge for the markets. Simply put, when the VIX increases it generally means that the market participants are fearful. On the flip side, when it declines it tells us that the market participants are generally relaxed, calm and often complacent. Recently, the VIX surged to 23.38 on May 9, 2019. Since that high in the VIX it has been declining. Today, the VIX is trading down around the 16.90 level and the markets are all rallying higher. As you can all see, fear in the marketplace has subsided for the time being. Will the VIX surge again? In my humble opinion, it will surge again and it won't be that far away in time. In the past, whenever the VIX has breached the 20.00 level it will usually do it again withing the next couple of months or sooner. So enjoy the relief rally in the markets from the recent oversold condition as it may not last all that much longer.