So you have been watching this “interesting” stock market. One day down, next day up and in the end you don’t seem to find any “wealth effect” in your stock portfolio. And then there is this marvelous VIX, Uncle Ben’s bullish notes about subdued inflation, bullish economic data and you think everything seems to be going in the right direction. Then you see commodities surging, Gold and Silver making record high almost non-stop while US Dollar tanking. It’s an “interesting” market.
VIX is almost at 3 year low and headlines will give one an impression that everything is brilliant, that market participants are complacent and satisfied and that risk is almost non-existent (Well, isn’t that what Uncle Ben wanted?). Part of the story I already shared on yesterday’s site i.e. VIX futures are reflecting uncertainty in longer term as opposed to shorter term. Now, let me share a chart (via Zero Hedge) reflecting fear as measured by indices that are not’s used, generally, in mainstream media. I had heard about these indices before but frankly it was originally Zero Hedge that connected the dots first (read more here). This is sharing those dots while adding a few trading ideas.
The chart above has three indices in it. Let me explain the above chart-