Volatility Going Nowhere

With the S&P 500 drifting closer and closer to 52-week lows, one would expect to see the VIX volatility index moving higher and higher.  While it has risen over the last few weeks, the VIX is nowhere near the highs reached during the January and March market lows. 

The VIX typically pops when investors become fearful of their stock investments.  Big spikes in the VIX tyipcally signal panic selling, and many investors wait for this panic selling to signal a short-term bottom in the markets.  If the current levels of the VIX are any guide, we still have a lot of pain to go through before that bottom is reached.

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Comments

[basehitz]

Comparing current VIX and SPX behavior just before the January plunge, the setups are similar. If it repeats, a few days of selling could both take out the January lows and quickly ramp the VIX into the 30s again. That's the trade I'm looking for.

[fatcat]

basehitz,where are you going long if that happens.I'm still very scared of the financials and all the ags and energy look a bit overbought.Thoughts anyone?

[theobannion]

Dear Fatcat,

Sure. Clean energy might work. Broadwind Technologies (BWEN) & Canadian Solar (CSIQ) are two possibilities. The brave of heart might try a micro-cap like Acorn Energy (ACFN). Ocean drillers like Pride International might also be good.

(Positions in the first three above.)

[gordon]

BULLCRAP-- the $VIX is about to break above 25, read a chart
tinyurl.com/66ec9t
above 25 says 30 imminent, imo

[alphameister]

With this highly bifurcated market that has energy and ag stocks in strong bull markets while financials are making new lows, is it not possible that the point of maximum fear will prove to have been the March lows for the broad market? The recent drop by the VIX to the mid teens broke an uptrend channel, suggesting that the next VIX peak might be well below earlier peaks.