The Vix index – a measure of stock market volatility – has reached its lowest level since January 2020 (pre-Covid). The level has reached 12.28. The high for the year reached 38.94.
A low VIX means the market is becoming more confident about earning expectations. It also can often coincide with an expensive stock market (when you least expect a shock it often happens). Any shock or risk to the economy and profits could cause the market to drop.
The high Vix for the year was in the March 13 week at 30.81 during the banking crisis (SVB went bankrupt on March 10). The high in 2022 was in January at 38.94. The last high was reached during the week of October 23. The Vix tested the 200-week MA near 22.92, while the S&P was testing the October lows (see chart below).
Vix reached a high in October as the S&P was reaching a low
Will the low Vix be a prelude to a sharp correction or some shock going into 2024?
The major indices are now all higher on the day:
- Dow Industrial Average is up 102 points or 0.28% at 36508.08
- S&P index is up 4.66 points or 0.10% at 4627.11
- Nasdaq index is up 24.45 points or 0.17% at 14456.64
All the major indices closed at new highs for 2023 yesterday and are now on pace for a new record high today. The FOMC will meet tomorrow at 2 PM ET and they certainly could influence the market as we head into the last few weeks of the trading year.