VIX/VXV Level Warrants Investor Attention - Hello Friends as always i would invite you to join and Promote one of the world's premier top rated investment companies and pioneers in alternative assets: market investment in and purchasing of alternative asset classes including gold, precious metals, Bitcoin and other cryptocurrency for direct purchase investors, the vast US market of IRA, 401k and other retirement account holders, the Canada market for RRSP and TFSA holders (precious metals), high net worth individuals and families (HNWI), and more. Mutl-trillion dollar potential market with one of the highest paying affiliate programs in the world.

• Life changing income potential: up to $30,000+ commission for each and every referred customer transaction
• 100% free affiliate marketing program - No cost for you to join or participate in
• 3% commission on all gross client sales transaction amounts for all present and future sales and investment in precious metals and cryptocurrency
• You are also paid $30 - $100 for each qualified lead
• Example: average sale = $65,000 = $1,950 commission; sales easily = 6 and sometimes 7 figures. $100,000 sale = $3,000 commission and $1,000,000 sale = $30,000 commission
• Some affiliates have made $40,000+ to $100,000+ commissions in a single month
• Lifetime revenue share on customer transactions

Join NOW Exclusive Affiliate Program ✅ CLICK HERE Join Exclusive Affiliate Program

Disclosure: The owner(s) of this website may be paid to recommend Regal Assets. The content on this website, including any positive reviews of Regal Assets and other reviews, may not be neutral or independent.
July's return for the S&P 500 Index of 5.64% pushed the index into positive territory for the year, returning 2.38% year to date. More impressive is the S&P 500's return since the March 23 low at +46.2%. It is hard not to agree there appears to be an upward bid to the equity market in spite of concerns around the virus induced weakness in some of the economic data, especially in the jobs/employment data. In my last post I wrote about the AAII Sentiment Survey and concluded the market seems to be climbing a wall of worry given the low level of bullishness being expressed by individual investors.

Noteworthy from a calendar perspective is the November election is beginning to factor into other sentiment measures like the VIX and more specifically the 3-month Volatility Index (VXV). Just like most investor sentiment measures, the significance of the readings works best at their extreme. In the case of the VIX and VXV, it tends to be easier to gauge market bottoms with high VIX values than  market tops with low VIX levels. As can be seen in the below charts, both the VIX and VXV spike at times of market fear. With the 3-month Volatility Index, VXV, at a higher level, the option market is expecting higher volatility three months out versus over the next month (VIX), this is referred to as the VIX curve being in contango.

A better way to look at the VIX term structure is by comparing the VIX and VXV together. A common way to look at these two risk measures is to evaluate the ratio over time. The below chart shows when the ratio of VIX to VXV is say greater than 1.1, i.e., backwardation, the equity market (S&P 500 Index) is at or near an intermediate low. The average for the ratio on the chart is .91 and the ratio spends most of its time at levels below 1.0. Clearly it seems more difficult to predict market tops with lower ratio levels since the ratio spends most of its time at levels below 1.0. Other writers have noted market tops tend to occur at ratio levels below .75.

It can insightful to evaluate the absolute difference between VIX and VXV versus simply lookign at the ratio. Currently the spread is a wide negative 5.25%, which indicates option market pricing is factoring in higher volatility three months from now (VXV) versus over the next 30 days (VIX). Worth noting is this wide of a spread has occurred near intermediate market tops. And off course this higher future volatility coincides with the upcoming U.S. election.

Finally, the market is in the calendar period where seasonal weakness tends to be most prevalent, i.e. in August and September. Ryan Detrick, CMT and Chief Market Strategist with LPL Financial, highlights this with the below chart. In an election year though, August has been a positive returning month for the S&P 500 Index.

In conclusion, on an absolute basis, the VIX and VXV remain elevated and are trending lower which generally is favorable for stocks.

However, when evaluating the two variables as a ratio or their absolute difference, market caution might be warranted. With the ratio at .82, historically, the S&P 500 has a pretty strong positive track record as it appears a level below .75 is a better indication of a potential market top. In short, another measure at a level perfect for the market to climb the so-called proverbial wall of worry.

Kit includes information on our company, products and fees.
Bonus: you will also receive free DVDs and a 10 year anniversary silver coin.
✅ CLICK HERE Claim Your Free Investor Kit

your advertise here
Next article Next Post
Previous article Previous Post