Buy the Rumor? Sell the News?: Market ‘Fear Gauge’ Near 1993 Low : WSJ

source: wsj


Gunjan Banerji

Market’s ‘Fear Gauge’ Nears 1993 Low

Low reading indicates investor comfort with current market but also raises questions about index’s reliability

What was unusual about the CBOE Volatility Index’s tumble on Monday was that it fell as the S&P 500 index also retreated. Above, traders earlier this year in the Volatility Index pit at the Chicago Board Options Exchange.

A measure of expected stock volatility, known as Wall Street’s fear gauge, slid Monday to its lowest level in nearly a quarter-century, indicating investor comfort with the current market but also raising questions about whether the metric was still a reliable indicator of investor anxiety.

The CBOE Volatility Index, also called the VIX, fell as low as 9.67 Monday before closing at 9.77, down 7.6% on the day and marking its lowest close since ending at 9.70 on Dec. 27, 1993, according to The Wall Street Journal’s Market Data Group.  (read more…)