Most folks don't understand how the Volatility Index ("VIX") really works... Like many financial tools, it's somewhat convoluted.
The Hidden Message in the VIX
By Karina Kovalcik, senior quantitative analyst, Chaikin Analytics
Most folks don't understand how the Volatility Index ("VIX") really works...
Like many financial tools, it's somewhat convoluted.
Most people think the VIX measures the current volatility of the market. But in reality, the VIX actually measures how much volatility investors expect over the next month.
Essentially, the Chicago Board Options Exchange designed a formula using options to give investors a useful way to measure market expectations...
When the VIX spikes, it tells us that investors expect a bumpy road ahead. And if it's low, it means investors anticipate relative calm in the markets.
That brings us to an important distinction. In short, instead of telling us current market conditions, the VIX measures how people feel things will happen moving forward.
And right now, folks are feeling pretty extreme... The VIX has roughly doubled this year.
We've discussed market volatility a lot recently. But with the VIX climbing to an extreme level, it's telling us that investors expect we'll need to deal with the volatility even longer.
As I'll explain, today's extreme measure in the VIX has big implications for the market's future returns. And it's likely not what you would expect...
A secretive analyst from Georgia is revealing a proven way to see 1,000% potential gains in a down market... WITHOUT options, cryptos, or "shorting" stocks. It's already led to historical gains of 1,180% in 14 months... 1,126% in eight months... and 415% in less than a year. But as he explains, this rare window of opportunity is closing fast. Click here for details.
I never worry about my retirement income, no matter what happens with politics or the markets. I've got legal obligations on my money. Now, a once-in-a-generation opportunity to see 700%-plus potential in my favorite strategy just opened again. I explain everything right here.
Let's start with the VIX's five-year chart...
Notice that the VIX is well above its long-term historical average of roughly 20. That's still true even though it has come down significantly from the initial COVID-19 panic.
People still expect rough times ahead. But there's something funny about that...
The VIX is at about 33 right now. That's near a key point of 35. Since 1990, when the VIX has exceeded 35, the S&P 500 Index has produced the following returns...
That's significant outperformance over all three time frames.
But importantly, the VIX hasn't exceeded 35 yet. And I need to be clear...
With everything going on in the world right now, this isn't a cut-and-dried indicator.
The stock market is fighting against several strong headwinds. It's battling soaring inflation, rising interest rates, war, supply-chain issues, labor shortages, and other obstacles.
So remember, the VIX isn't the only thing that rules the stock market. What happened in the past doesn't always happen in the future. And the stock market still needs to overcome the challenges just mentioned.
Put simply, things could still get worse before they get better. That's why I would wait for the trend to change back in your favor before going "all in" on the stock market.
With that said, history points to big upside potential once the tide turns.
Don't let fear prevent you from missing that opportunity.
Good investing,
Karina Kovalcik
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
-0.26%
5
20
5
S&P 500
+0.23%
58
325
113
Nasdaq
+1.22%
4
69
26
Small Caps
+0.01%
136
1219
536
Bonds
+0.91%
Information Technology
+1.52%
1
60
14
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks are Bearish. Major indexes are mixed.
* * * *
Top Movers
Gainers
FTNT
+6.76%
MCHP
+6.13%
SYY
+6.13%
IFF
+5.03%
INCY
+4.80%
Losers
XRAY
-7.31%
NWL
-6.76%
MO
-6.68%
VTR
-5.45%
PLD
-5.26%
* * * *
Earnings Report
Reporting Today
Rating
Before Open
After Close
PSFE
STE, CPA, DOX, PRGO
WEN, YETI
DIS, BYND
No earnings reporting today.
Earnings Surprises
TTD The Trade Desk, Inc.
Q1
$0.21
Beat by $0.07
SYY Sysco Corporation
Q3
$0.71
Beat by $0.16
WELL Welltower Inc.
Q1
$0.13
Missed by $-0.04
FOXA Fox Corporation
Q3
$0.81
Missed by $-0.07
TDG TransDigm Group Incorporated
Q2
$3.86
Beat by $0.17
* * * *
Sector Tracker
Sector movement over the last 5 days
Utilities
0.00%
Staples
-0.31%
Energy
-2.22%
Health Care
-2.33%
Industrials
-3.51%
Financial
-3.89%
Communication
-4.54%
Information Technology
-4.61%
Materials
-5.10%
Discretionary
-8.43%
Real Estate
-9.03%
* * * *
Industry Focus
Software & Services
2
99
86
Over the past 6 months, the Software & Services subsector (XSW) has underperformed the S&P 500 by -23.52%. Its Power Bar ratio, which measures future potential, is Very Weak, with more Bearish than Bullish stocks. It is currently ranked #15 of 21 subsectors and has moved up 1 slot over the past week.
Indicative Stocks
AFRM
Affirm Holdings, Inc
MSTR
MicroStrategy Incorp
U
Unity Software Inc.
* * * *
You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, click here.
You're receiving this e-mail at diansastroxz.forex@blogger.com.
For questions about your account or to speak with customer service, call +1 (877) 697-6783 (U.S.), 9 a.m. - 5 p.m. Eastern time or e-mail info@chaikinanalytics.com. Please note: The law prohibits us from giving personalized investment advice.
Any brokers mentioned constitute a partial list of available brokers and is for your information only. Chaikin Analytics, LLC, does not recommend or endorse any brokers, dealers, or investment advisors.
Chaikin Analytics forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees of Chaikin Analytics, LLC (and affiliated companies) must wait 24 hours after an investment recommendation is published online – or 72 hours after a direct mail publication is sent – before acting on that recommendation.
This work is based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors, and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.
Post a Comment
Post a Comment