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You are here: Home / Recent / What is the VIX?

What is the VIX?

February 18, 1999 by Larry Connors

Tonight, I’d like to give you a “heads-up” concerning the VIX.

The VIX (the Chicago Board Option Exchange’s volatility index) is becoming an increasingly popular indicator in the financial press. Reporters have been quoting so-called option gurus who say the VIX is high and the market is likely to reverse.

While this may be true, the VIX is absolutely not a timing mechanism unless accompanied by other signals. In mid-September, for example, the VIX was in the high 40s and 50s! Had you listened to the chant that it was “too high, and stock market has to rise,” you would have been decimated when the Dow tumbled to new lows in October. The next time you read the VIX is “too high,” be careful.

Markets to watch: In the futures markets, today’s massive move in the energies took care of the low-volatility situation that was originally mentioned by Dave Landry Friday in his “Trading Outlook.”

In stocks, the airline index–especially [UAL>UAL] and [AMR>AMR]–is overdue for a large move. Multiple-day readings on both the 6/100 and 10/100 calculations suggest an explosive move is imminent.

Filed Under: Recent, Trading Lessons, Trading Lessons

About Larry Connors

Larry Connors has over 30 years in the financial markets industry. His opinions have been featured at the Wall Street Journal, Bloomberg, Dow Jones, & many others. For over 15 years, Larry Connors and now Connors Research has provided the highest-quality, data-driven research on trading for individual investors, hedge funds, proprietary trading firms, and bank trading desks around the world.

Larry has been published extensively, with titles like How Markets Really Work, Short Term Trading Strategies That Work, High Probability ETF Trading, and The Connors Research Trading Strategy Series including our latest Guidebook High Probability Trading with Multiple Up & Down Days.

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