Wednesday, April 9, 2008

About volatility...

That's what you have to think when you take a look at how the CBOE volatility index (VIX) relates to stock prices. Typically, this index spikes higher when stock prices drop.

As you can imagine, this index has been trending up since May of last year. But now it's sitting under its 200-day moving average.

If the VIX stays under this average any longer, it could signal the beginning of a long rally in stocks. Be sure you have tight limits on any shorts in the market.

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