The VIX is Screaming BUYER BEWARE!
Mar 26th, 2009 | By Charles Delvalle | Category: Chart of the DayThe stock market has rallied over 20%. Everyone thinks that we’re in the midst of the next ‘suckers rally’. I’m even convinced that the market will head up over the next few months. But the Volatility Index (VIX) is still saying ‘buyer beware’.
(If you’re unsure what the VIX is, check out this explanation here.)
As you can see in the chart above, the VIX formed a support line at around 40.
This is a very important line because it hasn’t been breached since late September – just after the Lehman fiasco.
Considering the VIX index measures fear, a break under it would symbolize a less fearful and volatile market. And less volatility correlates perfectly with higher stock prices.
So if you want to be extra safe before buying stocks, wait for the VIX to break under 40 before jumping in.
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Charles Delvalle is a self-taught market-timing professional and value analyst who's followed and invested in the market for the past ten years. He uses a unique combination of technical and fundamental research to pinpoint rapid profit opportunities with stocks and options.
Charles is also a staunch contrarian and takes pride in finding undervalued sectors and discovering undervalued, cash-rich companies. He frequently mocks government stupidities and points out the "inaccuracies (or lies, take your pick) that government reporting frequently dispels as "truth".
