Baseline Analytics Blog

Market risk assessment tools and tactical investment opportunities driven by curated financial insight

Extreme Reading Turning Neutral - Buying Opportunity?

We look for peaks and troughs in the CBOE VIX indicator versus its moving average (see chart below).  Peaks tend to coincide with short-term market lows, and troughs with market highs (measured by the S&P 500 index).  

Note how VIX hit a trough before the S&P 500 settled back from its recent high.  Since then, VIX has turned neutral (closing in on its moving average).  We read this as a bullish sign, as recent consolidation in the S&P 500 may present a less risky opportunity to add to longs.

VIX12022016 

 

 

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Extreme reading turning neutral

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