Thursday, January 17, 2019

VIX may have already fallen enough for stocks to rise

“Significant gains” may lie ahead for U.S. stocks even if the Cboe Volatility Index falls no further from its peak last month, according to Michael Purves, Weeden & Co.’s chief global strategist. He cited the gap between the indicator, known as the VIX and derived from S&P 500 Index options, and the S&P 500’s 20-day volatility in a report Wednesday. The spread ended last week at 13.4 percentage points, the widest since September 2011 when the VIX was lower. Wednesday’s gap was 11 points as the VIX closed at 19.04, far below its recent high of 36.07 on Dec. 24.

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