Volatility Index Continues to Fall

In another sign that the markets could extend the current rally into something longer term, the CBOE Volatility Index (VIX) has fallen to a new three month low to $33.94. Sometimes called the fear index, the VIX shows the amount of hedging in the markets to ward against a downturn and rises when the markets begin to turn south. The drop the VIX over the past two weeks resembles the fall in the S&P 500 that we saw just before the current rally began. There was a break of resistance at $40 on the 3rd on April and the index has continued to fall fairly steep since.

Ultra S&P 500 Proshares (SSO)

You can play the VIX if you are an advanced trader but watching the index and making stock and index trades based upon is the method that I prefer. I am still long the Ultra S&P 500 ProShares (SSO) and added some June 24 Calls with the ticker symbol SOJFX this week. This is a very bullish position without any protection so I will need to watch the markets closely this week to see if there are signs of downward pressure that I should hedge for.