It’s no secret that people don’t like uncertainty. By nature, humans are generally creatures of habit—preferring stability and safe outcomes. This is especially true when it comes to financial matters.
However, financial markets are almost always facing some type of uncertainty, be it corporate earnings, interest rates, or geopolitical events. The issues are often benign and the outcomes are non-events, but as we know, there are always surprises causing markets to react.
The volatility index, commonly referred to as the VIX, is a measure of investor uncertainty and fear of the unknown. The VIX can go months at a time meandering along without much direction and impact on the markets. Other times, it will react on a relatively mundane piece of news, then gain momentum on each subsequent development.
Case in point: the past seven trading days.Read More