by Grant Wasylik
Casey Research
Over the last week or so we’ve seen market volatility (as measured by the CBOE Volatility Index, or VIX) go from a reading of just under 19 to as high as 28.5 in a matter of days…
When the VIX is under 20, it’s a general indication of a “stress-free”, stable market. Investors are calm, confident, and looking to buy or hold stocks on the rise.
But when the VIX kicks above 20, investor confidence has waned and selling has picked up. And when the VIX breaks above 30, the market is considered to be highly volatile.
When investor fear is high, riskier investments are often sold off in an attempt to play defense against future uncertainty… so when the VIX came within reach of 30 last Monday, many investors panicked.