VIX Falls to 11.5 Close to Yearly Low

The CBOE Volatility Index (.VIX), fell below 11.5 Tuesday to its lowest level since Dec. 8, coming within half a point of the year’s low at 11.02. Meanwhile, stocks continued their rally Tuesday, with the Dow Jones industrial average and Nasdaq composite setting fresh record closes.
“Everything about it is telling me people are kind of apathetic about what’s going to happen for the rest of the year,” said JJ Kinahan, chief strategist at TD Ameritrade.

“Next week, you may see people suddenly starting to hedge themselves,” he said, noting concern about the strong dollar’s impact on U.S. earnings. “The real question starts to become, as we get closer to earnings, [do] people start to hedge themselves for an overall market sell-off?”

Typically, a low VIX signals a market that’s comfortable with current levels. But as 2016 winds down, some analysts say the low levels in the VIX and improved outlook on growth potentially set the market up for disappointment — and greater volatility ahead.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza