The Ultimate Guide to Understanding the VIX: Are We Heading Towards Market Volatility?
As the world's top investment manager and financial market journalist, I bring you the latest insights on the VIX, also known as the "fear gauge." According to the Sevens Report, the VIX is showing signs of potential volatility spikes after a recent decline.
Despite currently sitting around 15, the VIX is trending higher, forming a series of higher lows not seen since late 2021, a period of significant market turmoil. Additionally, the VIX futures curve is in backwardation, with the October contract trading at a premium to the November contract. This suggests that traders are preparing for increased volatility in the coming weeks.
Sevens advises monitoring three key developments: a VIX index rise above 24, normalization of the VIX futures curve (bullish for stocks), or a widening premium between October and November contracts. If the latter occurs, it could indicate a selloff risk, potentially sending the market back to early September or August lows.
In conclusion, understanding the VIX and its implications is crucial for investors. Stay informed, watch for these key indicators, and be prepared for potential market volatility in the near future. Make informed decisions to protect your finances and investments.