The vix is the calling code Chicago Board Options Exchange Market Volatility Index (CBOE)namely, the volatility index of the Chicago put options market. When high volatility appears in the market, as it happens this Monday, the VIX reaches a high figure and correlates with falls in the New York S&P500 index.
In other words, what the CBOE index tells us when it rises is that Fear and pessimism predominate in the market, which reacts with strong downward movements in the face of certain events. On the contrary, when the VIX falls, confidence invades the investor mood.
The theory of this indicator is that if the market is bearish, investors believe that the market is going to fall, they will cover their portfolios by buying more puts and on the contrary if the operators are bullish they will not buy puts, since they will not see the need to protect themselves. Definitely It discounts expectations in the near future and generally works in the opposite direction to the index.
The Dow Jones Industrial Average lost 1.3%; the S&P 500 index fell 1.6%; and the Nasdaq Composite fell 1.9%.
All 11 major S&P 500 sectors fell in early trading, with interest rate-sensitive information technology, consumer discretionary and communication services among the biggest losers.
High-growth companies like Apple and Tesla subtracted 1.4% and 2.4%, respectively.
Last week, the Nasdaq and S&P 500 snapped a four-week rally after growth stocks fell and the 10-year Treasury yield touched nearly 3% on inflation fears.
Banks fell 2.1% on Monday, with both JPMorgan Chase & Co and Bank of America down nearly 2%.
This week, attention will turn to Fed Chairman Jerome Powell’s speech at a central bank conference in Jackson Hole on Friday for more clues on the path of monetary policy tightening.
Source: Ambito
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