It Would Be Too Quick Now To Have Another Spike In Volatility
- Posted by JC Parets
- on June 26th, 2012
Occasionally we’ll bring up the volatility index if we think that it’s something worth noting. More often than not we just consider it a negatively correlated asset to US Equities. So whatever stocks are doing, the VIX should be doing the opposite.
But every now and then, two weeks ago included, we’ll notice something a bit more actionable in the so called ‘fear index’. On Monday, Carter Worth, Chief Market Technician at Oppenheimer, came on CNBC to talk technicals with Maria. Put simply, he feels that the VIX is still quite elevated relative to the lows of the past decade. But more importantly, the spikes that we see up towards 35-40 over the last few years tend to come after a certain amount of time has passed. In other words, there are intervals between them. And it would be too soon right now for another spike.
Carter also notes that we are currently at the exact average price that the VIX has traded since its inception in 1992. I thought that was interesting. I don’t think it really means much right now, but I suppose it’s just good to know a little history to help put things in perspective.
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J.C. Parets is the Founder & President of Eagle Bay Capital, LLC. He earned the Chartered Market Technician designation (CMT) and is a member of the Market Technicians Association. More
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