VIX is suspiciously low

Vix is down by 13% over the past five days at $15.43 as investors are scratching their heads trying to figure out why it is so low.

On September 20 Vix was at $25.71, highlighting the substantial fall seen in recent weeks.

Having dipped below $15 on Friday, Vix, known as the Chicago Board Options Exchange Volatility Index, was at its lowest point since before the pandemic.

Historically, Vix dipping to this level suggests that stocks will rise.

The dip in the Vix came as the S&P 500 reached another all-time-high towards the end of last week, eclipsing the record set on September 2, as the US index posted its third straight weekly gain.

Vix is a real-time market index which represents the market’s expectations for volatility over the next 30 days.

The Vix index moves up because professional investors are reacting to increased price volatility in the S&P 500 specifically, but also wider markets.

The index is used by investors to judge risk levels, fear, and stress in the market when making decisions.

The S&P 500 has been flying since the pandemic hit in early 2020, adding 33.64% in the last 12 months, as the US put in place stimulus measures to support the economy.

Analysts previously made the case that the US stock market may have run its course, expecting Vix to climb to above $40.

However, that proved not to be the case, adding to the suspicion around Vix’s current low level.

Things could become clearer next week as four out of five FAANG stocks will release the earnings reports, which could test the S and P 500’s recent rally.

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