The VIX Index, also known as ‘The Fear Gauge’ has fallen – well, crashed is more like it – to its lowest level in decades. This trend has been going on for a few weeks – the index decreased about 30% [i]since April 13th.
Just to remind you, the VIX Index is unique, in the sense that it measures implied volatility of the S&P 500 index options. In simple terms it attempts to show how volatile investors think that market will be, hence, some people consider it as an assessment of market fears. Historically, when market uncertainty and potential risks rise, the VIX will often climb as well. When markets are calm and doing well, the VIX will often decrease.
Why are investors appearing to shrug off fear and uncertainty? Well, the French election resulted in a clear win for Emmanuel Macron, removing a major, possible risk to global stability. A lot of the economic data in the US and other major economies has met analyst expectations or surpassed them.
Needless to say though, new geopolitical and economic risks can appear every day, and it’s important to remember that the market is moved not only by data and facts, but also by psychology. Stay informed with recent events, read the news and follow market changes – for traders, any volatility can mean an opportunity and good timing is invaluable.
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