Zero Must Tell?

• Posted by Adam Warner
• on July 30th, 2009

Looks like The Scourge of Dennis Kneale has moved to new digs. Oddly enough the same day I moved to new (different) digs. And get even more curious, he is writing about the VIX and the CSFB Fear Index.

Either the VIX is being gamed by volatility sellers into one of the biggest short squeeze rallies in recent history or the CSFB Fear Index should add the phrase “Lack Of” somewhere in its description. Or is mainstream media simply pumping whatever is the most behind the scenes manipulated index to promote a false sense of calm among the retail population?

Um, I wouldn’t put anything by the Goldman’s of the world, but you have to put the volatility drift into some context. Individual stock volatility has hit the skids. Realized volatility in the SPX is at a 52 week low. Compared to all that, the VIX actually overstates Fear.

The CSFB is quite new, and frankly, defies a bit of logic so far. I’m inclined to think CSFB is the outlier. If in fact someone wants to manipulate the VIX down (if that’s realistically possible), they could knock it further than this given the overall backdrop.

 

 

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