Take a look at this chart of the VIX index (the S&P500 implied volatility index). This is not your standard "stochastic" process . In the last 5 years the index has maintained a definite floor somewhere around 15. VIX is currently at 15.45. Risk pricing in US equities is once again showing lack of caution. . . .
http://soberlook.com/2012/07/vix-near-lows-shows-mispricing-of.html
Yesterday's new high wiped out that potential head and shoulders top that I was worried about, but the steady loss of momentum over the last 5 weeks combined with the complacency make this look like a market that could tank on short notice with very little provocation.
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| VIX |
Yesterday's new high wiped out that potential head and shoulders top that I was worried about, but the steady loss of momentum over the last 5 weeks combined with the complacency make this look like a market that could tank on short notice with very little provocation.
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