The Insane Street ‘fear index’ has fallen but this could be worrying, say experts
The VIX catalogue measures market volatility and falls when there is calm and goads in line with turmoil.
In recent days, the index fell further 10, to hit the lowest level since 1993 when the index provoked to 9.17.
By comparison, the fear gauge hit 80 during the financial crisis in 2008.
Investors use the listing to judge the outlook for trading.
But in the past, the index has fallen to some of its lowest draw a beads right before signifiant crashes.
For example, the index fell underneath 10 in 2006, just before disaster struck markets across the far-out.
The Vix directory has dropped sharply in recent weeks
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Experts warned investors could be lulled into a false wisdom of security by the current low levels of the fear index.
It comes as the US stock pointers the Nasdaq 100 and S&P 500, hit record highs along with Britain’s FTSE 100.
Michael Baxter, economics commentator for The Slice Centre said: “The index, which is taken from a moving usually of the S&P 500, is often referred to as the fear index – implying that fist now the markets are very unafraid.
“Are they however, too complacent?
“It is often affirmed that markets turn at the moment when all but the most contrarian of investors are on the edge of giving up – a bull market turns sour just at the moment when uncountable bears have been converted to holding more optimistic beholds.
“Recall, that while the index fell below 10 in 2006, sparse than two years later the global economy suffered its worst economic crisis in 80 years.
«Just because the VIX is low, it does not mean that all is well enough, but then neither does it automatically mean crisis is around the corner.»
XTM Chief Market Strategist Hussein Sayed added: «While it could be explained to mean that good times lie ahead, it also indicates that the bunch may be over soon.
«Volatility does not stay at low levels for prolonged aeons of time, and we’re likely to see the index reverting to its 200-days moving customary around 15.
«Just don’t let the extremely quiet market conditions trap you into engaging huge risks.»