Even though the market is barely up on the day at the moment, the VIX volatility index is down more than a point and has broken below 40. As shown in the long-term chart of the VIX below, prior to the current bear market, the VIX seldomly moved above 40. However, since last September, the VIX has remained solidly above 40. Since the VIX is widely considered a "fear" gauge that rises along with investor nervousness, the bulls would like to see the index break solidly below 40 for a longer period of time.
To me this is a sign of complacency & bearish because the break below 40 has not been accompanied by commensurate upward price progress in stks.
The analogy would be needing more & more gasoline to drive the same amount of miles.
Posted by: dave | April 09, 2009 at 07:51 AM