Why the S&P 500 Needs the VIX Needs to Keep Falling if it Wants to Keep Rising By Crystal Kim Updated Feb. 7, 2019 12:51 p.m. ET Photograph by Hulton Archive/Getty Images Text size Streaks are made to be broken, and the Cboe Volatility Index is on a hell of a long one. The VIX fell to 15.04 on Wednesday, its lowest level since Oct. 5, when it closed at 14.82. The so-called fear gauge has gone 82 consecutive days without dipping below 15, among the longest streaks above that level in history. The back story.The VIX—which measures the volatility of options on the S&P 500—has calmed down a lot since the December spike, when the S&P 500 tumbled 15%. This time last year, volatility investors were dealing with the aftermath of the Great Volatility Blowup, which killed one inverse exchange-traded note and left an indelible mark on an exchange-traded fund. Relative to that, the VIX seems low—normal, even. The plot twist.The VIX is sitting at just above 15. With a lately dovish Federal Reserve, it could be headed lower. “The major indices are overbought, and volatility is oversold...a combination that worked just fine in 2017 and so far in 2019,” writes Frank Cappelleri, an Instinet technical analyst. This setup, however, changed quickly twice in 2018. What’s next.If the VIX breaks below 15, the S&P 500 might just hang in and make new highs again. Last year, after the early February volatility event, lower highs in the VIX gave way to new lows through the spring and summer, which helped keep the S&P 500’s multimonth climb going. That is less likely to happen if the VIX sticks to “its stubborn ways” and stays above 15, writes Cappelleri. With the so-called volatility of volatility, or the VVIX, making new lows and hitting levels unseen since mid-2017, the VIX could be headed lower too. The big question: What’s more resilient, the S&P 500 or the VIX? Write toCrystal Kim atcrystal.kim@barrons.com https://www.barrons.com/articles/advisor-why-cds-outshine-bond-funds-51549559570
Lots of "Needs"!!! No, S&P does not need an indicator that's based on itself to go to a certain direction to keep rising. This just shows how ignorant and clueless the author is. S&P needs healthy productivity, positive trade relations, and restrained national debt, all the ingredients of a healthy economy to keep rising.
Actually the S&P 500 just needs loads of money being thrown at it to keep rising....the other stuff is just fluff.
Yes but that money is supposed to come from a healthy economy. Warren Buffett threw money to invest in AAPL last year and that propped up the index look what happened. I don't think he will ever do that again.
S&P 500 don't need VIX to help it fall / rise. Similarly VIX don't need S&P 500 to help it fall / rise.
Was the more than trebling of the S&P 500 in the last decade due to the money from a healthy economy or due to the money from QE?