Saturday, September 11, 2010

When to buy and sell stocks? The VIX indicator

The CBOE Volatility Index (^VIX) is a measure of market sentiment, based on options trading among the S&P 500 companies.

The most extreme bullish is at 13 and the most bearish events is at 49.

- At 13: This means investors are very complacent. We should buy the VIX and sell stocks.

- At 49-Plus: This means investors are panicking. We should sell the VIX and buy stocks.

Currently, the VIX indicator is at the low 20s, and declining. It is time to get ready to sell. A more detailed discussion can be found here.

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