The VIX Predicted a Downturn in the Market
Volatility Index Coverage – Webinar Video Excerpt
Elliott Wave Plus
The VIX (volatility index) represents the market’s expectations for volatility. Many traders refer to it as the “fear index” because it can be used to measure risk in the market. If the VIX is moving up, this can be an indicative of stress, and usually coincides with an upcoming downturn in the market.
For the past few weeks, the VIX has managed to create a floor around 20 and has refused to move below this mark. This is unusual during an up-trending stock market like we have been seeing lately. Take a look at this screenshot of the VIX daily trend chart from Sept 2, 2020:
The video excerpt below is from the August 30, 2020 webinar. Our presenter, Sid Norris, goes into detail about current market conditions and lets subscribers know that being bullish could be troublesome.
What was the outcome?
As of September 3, the VIX was up 20% in just one day. The S&P-500 was down nearly 4%, and the DJIA was down 3%.
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