Encouraging Signs From VIX

Wednesday, May 20, 2009

The VIX broke below 30 yesterday hitting levels not seen in the 9 months since the bankruptcy of Lehman Brothers. Lehman Brothers' bankruptcy on September 15, 2008 caused panic in the markets and drastically increased volatility. The markets saw heavy selling with the VIX spiking through 30 to begin its 2-month explosion to 89.53, a new all-time high. Yet, as the markets have found footing and mounted a nice rally off lows we are seeing a pervasive calm in the market signaled by the reduction in implied volatility. Hitting pre-Lehman levels shows a significant reversal in sentiment even while the Dow is currently trading 2,500 points lower.


Post a Comment