Wednesday, October 1, 2008

Investor Fear Index – VIX

Have you heard of the Investor Fear Index – VIX?

It is the CBOE's Volatility Index. The VIX is often referred to as an investor fear gauge. It tends to rise when stocks fall. It skyrocketed on Monday, closing at 46.72, close to an all-time high for this index, indicating that a bottom might be seen on Monday.

Stocks usually advance after the VIX peaks. From history of this 18-year-old VIX, the S&P 500 added an average of 0.36 percent the next day and 0.5 percent during the next week, after the biggest percentage increases in VIX.

I do not use this VIX indicator but do monitor it regularly by reading reports issued by Mark Hulbert of MarketWatch.

Be careful, history might not repeat itself.

Interested to know more about VIX, click Mark Hulbert, MarketWatch

I've added the link for you to check the daily VIX under My Favourite Market News on right sidebar.

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