Monday, November 21, 2016

Choppy Waters Ahead?

The VIX, the stock market's so-called Fear Index, looks tame for now, indicating that there shouldn't be a whole lot of short-term movement in the market. But are there more turbulent times further into the future?

The CBOE Volatility Index closed below 13 on Friday for the first time in more than a month, but futures contracts tell a different story. The VIX future that expires next month was at 14.95 Friday, while the one expiring in June was at 19.35.

That rising level reflects expectations that volatility will rise, despite low current levels. The differential between one-month and six-month VIX futures is approaching its largest in the past two years, after an initial increase following the U.S. presidential elections last week.

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