They say a watched pot never boils. Ever heard a watched market never falls? Me neither, but still it appears that this market is just never going to go down. Here we are again scraping up against all-time highs approaching that 1900 level on the S&P 500. "But the volume is so light!" I heard you, but the market is creeping higher as we speak.
What's more is the CBOE Volatility Index. Without getting into too much detail, the VIX as it's called by traders, is a measure of fear in the market. It's calculated based on the number of put options being purchased on the S&P 500. The thinking is that when market participants are fearful, they buy protective puts to limit their downside risk on their long positions in the market. So when there is a lot of fear or protective put buying then the VIX spikes. When everything is coming up roses, the VIX is very low.
And we are low right now. Just take a quick look at the chart above. The VIX has been below 15 for 26 days in a row. This is the longest period below 15 since last December when the streak reached 35 days. We haven't had a big spike in the VIX for a long time. And the whole while the S&P 500 has been chugging along.
Is the market due for a spike in volatility soon?
History says yes. The VIX says yes. And I'm sure most everyone out there is going to say yes.
So I say no. Not to just to play Devil's advocate either. This hasn't been a huge surge and spike upward on the S&P. It's a slow, drawn out, systematic accumulation gradually guiding the market higher. We have yet to hit that point where people start to look at the market and go "This is crazy. It's too overdone." We had that with the dot com bubble, we had it with real estate. Right now we don't have that anywhere.
Let me know what you think. Help tame the bull that's stampeding across this keyboard right now.
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And we are low right now. Just take a quick look at the chart above. The VIX has been below 15 for 26 days in a row. This is the longest period below 15 since last December when the streak reached 35 days. We haven't had a big spike in the VIX for a long time. And the whole while the S&P 500 has been chugging along.
Is the market due for a spike in volatility soon?
History says yes. The VIX says yes. And I'm sure most everyone out there is going to say yes.
So I say no. Not to just to play Devil's advocate either. This hasn't been a huge surge and spike upward on the S&P. It's a slow, drawn out, systematic accumulation gradually guiding the market higher. We have yet to hit that point where people start to look at the market and go "This is crazy. It's too overdone." We had that with the dot com bubble, we had it with real estate. Right now we don't have that anywhere.
Let me know what you think. Help tame the bull that's stampeding across this keyboard right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
IPATH-SP5 VX ST VXX: ETF Research Reports
To read this article on Zacks.com click here.
Zacks Investment Research
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