Meanwhile, the VIX Index, also known as the Fear Index, measures the bullishness or bearishness (fear) of options players.
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The VIX Index , also known as the Fear Index, has already been attracting attention for more than a month.
Robert Harris in his recent novel The Fear Index examined the modern anxiety that fuses the threat of powerful technology with unbridled financial markets.
The volatility or fear index, as measured by the CBOE Volatility Index (VIX), is over 33, and has remained over 30 since the beginning of August, when the American debt issues and worries about Greece really started to reemerge in the market place.
The VIX Index (aka the Fear Index) is also showing a low level of fear (high level of bullishness and complacency), bouncing around 20, in the area associated with rally tops since the last bull market ended in 2007, as marked by the vertical red lines in the chart below.
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But as the rally off that low has progressed fear has disappeared, now measured at only 19 on the VIX Index, in the zone of low fear (high bullishness) usually seen near rally tops.
The CBOE Market Volatility Index, the "fear gauge" known as the VIX, rose to a one-month high, in a reflection of the raised worries about the economy.
The CBOE Market Volatility Index, the "fear gauge" known as the VIX, jumped as much as 13%, to a one-month high, in a reflection of the heightened worries about the economy.
The stock move was echoed by similar gyrations in other markets, where oil momentarily lost 0.7% before recovering, and the CBOE Market Volatility Index, the "fear gauge" known as the VIX, spiked 9% before falling back to its level just a few minutes earlier, down 5% on the day.
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Earlier this month, the CBOE Volatility index, known as the "fear gauge, " reached lows not seen since early 2007, before the financial crisis.
By purchasing calls on the VIX, which rises in periods of market fear or decline, one can hedge long index, ETF, or stock positions.
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The yuan may well still be undervalued but our index suggests American manufacturing should have less to fear from Chinese competition than it did five years ago.
And why fear the US level but not the global? (The MSCI World index total return is just 4.7% from its past high.) Or vice versa?
One way we can try to measure the level of fear in a given stock is through a technical analysis indicator called the Relative Strength Index, or RSI, which measures momentum on a scale of zero to 100.
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