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Monday, August 20, 2012


Since the low in 2009 the VIX has closed below 15 only three times on a weekly basis.  Here is the chart with SPX and the VIX.

The market reacted pretty negatively to that event the last two times it happened.  However, there were two periods in the past where it was not a problem for the market.  Here are the charts.

It never happened between 1997 and 2004.  We did not see an event after mid 2007 until 2011.  I guess the question is simply this.  Do you believe the current situation is similar to the middle 1990s and 2000s or not?



Unknown said...

I believe when reading the VIX, it's all about current level in relation to the current average. Market moves may be somewhat unpredicatable, mean-regression is a reliable truth. So for me, when looking to short or go long, knowing where the VIX is in relation to its mean adds one point of confluence to my thoughts.

Traderbob58 said...

Along with mean regression in markets, making multi year highs and lows can also be significant.



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