Is the VIX About to Breakout?
The market’s volatility index, known colloquially as the VIX (NYSE:VXX), caused some analysts to do a double take yesterday as the measure has breached its three-month high in market movements.
Due to high volatility trading related to yesterday’s big sell off, the VIX (NYSE:VXX) shot up almost three full points (a 20% increase) to its current level of 18.52. The index now stands at its highest level since March, though is only marginally higher than levels of 18.40 that it reached three times over the course of May, before trending back downward. Still though, to many investors today’s abnormally high VIX level serves as a bad omen for pending market performance in the summer months to come.
According to one financial blog, “today might have seemed like a strong rough patch, but in reality we have yet to see a complete meltdown or pervasive protection buying,” so the market is out of the woods for now. However, if the market continues to underperform and economic indicators lag, be sure to keep an eye on the VIX (NYSE:VXX) for the heads up on potential market scares and long-term trends.