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VIX Hits 7 Yr Low, S&P 500 Up For 3rd Wk Running

Posted by: : Paul EbelingPosted on: June 8, 2014 VIX Hits 7 Yr Low, S&P 500 Up For 3rd Wk Running

VIX Hits 7 Yr Low, S&P 500 Up For 3rd Wk Running

Friday, the Chicago Board Options Exchange (CBOE) Volatility Index, aka VIX dove 5.9% on the week to 10.73, the lowest mark since February 2007.

The Standard & Poor’s 500 Index rose 1.3% to 1,949.44 for a 3rd weekly gainer, the longest run since November. The DJIA  added 207.11 pts, or 1.2%, to finish at 16,924.28.

Volatility is fading, with the VIX trading within 2 pts of its all-time low, as confidence grew on the notion central-bank monetary stimulus worldwide will drive the global economy, extending the 5-yr bull market in equities.

Data showing NFPs pushed past their pre-recession highs for the 1st time reinforced speculation that the US is recovering from Q-1’s contraction.

Equities advanced from Spain to Japan over the 5 days as tensions eased in the Ukraine and the ECB became the 1st major central bank to take one of its main rates negative.

The MSCI All-Country World Index climbed 1.2% to the highest mark since October 2007.

The Federal Reserve officials are watching the labor market as they move to complete their bond-purchase program later this year. Central-bank stimulus has helped propel the S&P 500 higher by 188% from its bear-market low on 9  March 2009.

The Fed said in its Beige Book business survey during the week that the economy expanded at a modest to moderate pace last month as auto sales led household spending and the labor market improved.

The S&P 500 rebounded 7.4%  since a selloff in small-cap and Internet shares spread to the broader market, dragging the index to a 2-month low in April.

The Russell 2000 Index of smaller companies rallied 2.7% on the week, its best performance since February. It has recovered 6.3%  from a May low.

US stocks indexes continued to set records on low volume and a narrow trading range.

The S&P 500 has not  had a move of more than 1% at the close for 35 days running. That’s the longest line since a 38-day run ended in January 2007. About 1.8% shares traded each day in S&P 500 companies last month, the fewest since Y 2008, according to the data.

Hedge funds are betting the stock-market tranquility that is hobbling trading and hurting bank profits will be around for a while.

Large speculators are betting on lower volatility and were net short about 82,000 contracts on VIX futures last month, the most since October, data from the Commodity Futures Trading Commission (CFTC) show. The strategy will be profitable should the VIX continue its 22% fade this year.

Bulls are up among newsletter writers. The proportion of optimistic investment advisors in Investors Intelligence’s latest weekly survey increased to 62.2%, the most since January 2005.

Companies whose earnings are most tied to economic swings posted better returns on the week, with financial, industrial and consumer shares rising at least 1.8%. That marked a reversal from the 1st 5  months of the year, when defensive stocks such as utilities and healthcare outperformed.

The Stoxx Europe 600 Index gained 0.9% on the week, reaching its highest level in 6 yrs, as the ECB lowered interest rates and unveiled a package of EUR 400-M in cheap loans for the Eurozone’s banks. The equity gauge has advanced for 8 wks running, its longest winning streak since Y 2012, when the central bank’s president, Mario Draghi, said “the ECB is ready to do whatever it takes to preserve the Euro.”

The MSCI Asia-Pacific Index gained 1 percent for its 4th weekly gainer, finishing at the highest mark since October.

Japan’s Topix index climbed 2.8% as Prime Minister Shinzo Abe asked Norihisa Tamura, the minister who oversees the JPY 128.6-T ($1.3-T) Government Pension Investment Fund, to conduct an early review of its portfolio

Stay tuned…


Paul Ebeling


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Paul Ebeling

Pattern Recognition Analyst, equities, commodities, forex
Paul Ebeling is best known for his work as writer and publisher of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly-regarded, weekly financial market letter, where he enjoys an international audience among opinion makers, business leaders, and respected organizations. Something of a pioneer in online stock market and commodities discussion and analysis, Ebeling has been online since 1994. He has studied and worked in the global financial and stock markets since 1984.

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  • Matt

    Be in cash. The reason the VIX is low is because no one is buying stocks and volumes have fallen. Pigs get slaughtered.

    • jase

      you have no idea what you are talking about , chump:)

    • jparker70

      Actually what u r saying is correct. The deniers will be the first to lose cause of greed.

  • jparker70

    Lol, and what happened later 2007 again? I’m n listening

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