QOTD: Nick Colas on the Vix

The below, via my friend Nicholas Colas, chief market strategist at Convergex, a global brokerage company based in New York:

The general sentiment on the Convergex trading desks continues to be bearish, so today we’ll review seasonal patterns for the CBOE VIX Index going back to its starting point in 1990 to see what that math says about current market risk.  Over the last 27 years, the VIX has tended to bottom in three specific months: January (15% of the time), July (22%), and December (30%).  When the VIX does bottom in January, its average low reading is 12.2; today’s close was 11.9. That doesn’t guarantee that we’re at the lows on the VIX for the year, but given January’s propensity to represent an annual low it does merit your attention.  And since changes in the CBOE VIX index are strongly (and negatively) correlated to equity market returns, this is a warning sign about the near term direction of US stocks.

A reading of 11.8 is more than one standard deviation away from the VIX’s long term average of 20.  Additionally, the VIX rarely goes below 10.  Statistically, 11.8 is an unusually low reading for the VIX. 

Josh here – with a lot of the “Trump Trade” nonsense starting to unwind (the banks are down 2%ish over the past week and bonds caught a bid), don’t be surprised about having a two-way market going forward. The honeymoon never lasts forever post-election.

Source:

Make Stocks Volatile Again
Convergex – January 23rd, 2017

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. w88 commented on Sep 20

    … [Trackback]

    […] Read More on to that Topic: thereformedbroker.com/2017/01/24/qotd-nick-colas-on-the-vix/ […]

  2. PI News Wire commented on Sep 22

    … [Trackback]

    […] There you will find 94537 more Information on that Topic: thereformedbroker.com/2017/01/24/qotd-nick-colas-on-the-vix/ […]

  3. DevOps as a Service commented on Nov 05

    … [Trackback]

    […] Find More to that Topic: thereformedbroker.com/2017/01/24/qotd-nick-colas-on-the-vix/ […]

  4. axiolabs oral steroids commented on Nov 14

    … [Trackback]

    […] Find More here to that Topic: thereformedbroker.com/2017/01/24/qotd-nick-colas-on-the-vix/ […]

  5. log in to tangerine commented on Nov 14

    … [Trackback]

    […] Find More here on that Topic: thereformedbroker.com/2017/01/24/qotd-nick-colas-on-the-vix/ […]

  6. best site to buy cvv dumps commented on Nov 27

    … [Trackback]

    […] Find More to that Topic: thereformedbroker.com/2017/01/24/qotd-nick-colas-on-the-vix/ […]

  7. td online commented on Dec 04

    … [Trackback]

    […] Find More on that Topic: thereformedbroker.com/2017/01/24/qotd-nick-colas-on-the-vix/ […]

  8. knockoff audemars piguet online commented on Dec 08

    … [Trackback]

    […] Find More on on that Topic: thereformedbroker.com/2017/01/24/qotd-nick-colas-on-the-vix/ […]

  9. rolex replica commented on Dec 21

    … [Trackback]

    […] Information on that Topic: thereformedbroker.com/2017/01/24/qotd-nick-colas-on-the-vix/ […]

  10. Automated regression testing commented on Jan 17

    … [Trackback]

    […] There you can find 77396 more Information to that Topic: thereformedbroker.com/2017/01/24/qotd-nick-colas-on-the-vix/ […]

  11. repliki zegarkow commented on Jan 19

    … [Trackback]

    […] Info on that Topic: thereformedbroker.com/2017/01/24/qotd-nick-colas-on-the-vix/ […]

  12. human hair wigs commented on Jan 22

    … [Trackback]

    […] Find More to that Topic: thereformedbroker.com/2017/01/24/qotd-nick-colas-on-the-vix/ […]

  13. paito warna sgp commented on Jan 30

    … [Trackback]

    […] There you can find 49143 more Information to that Topic: thereformedbroker.com/2017/01/24/qotd-nick-colas-on-the-vix/ […]