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VIX Shows Light at End of Tunnel |
by S. Wade Hansen
Investors Gaining Confidence
2008 was a terrible year in the stock market. With the credit markets freezing, huge companies disappearing overnight and consumer confidence hitting record lows, investors fled the stock market in droves in search of higher ground. The question now is..."When will those investors come back?"
Judging from the value of the VIX right now, it looks like investors are already starting to make their way back into the stock market.
The VIX is Falling
The CBOE S&P 500 Volatility Index—better known as the VIX (NYSE: $VIX)—is an indicator of fear in the stock market. When the VIX is rising, it shows that fear levels in the market place are rising. When the VIX is falling, it shows that fear levels in the market place are falling. And right now, the VIX is falling.
Seeing the VIX start to decline should give you some confidence that you are not alone in putting your money back to work for you in the stock market. Other investors appear to be moving back into the stock market right along with you.
Of course, just because the VIX is falling now does not mean that it will continue to fall throughout the year. Most likely, the VIX will have periods of up-and-down movement. But if the overall trend keeps moving lower, it could be a decent year for stocks.
Keep an eye on the VIX by clicking on the chart on the left.
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