Post Fed VIX Blues

• Posted by Adam Warner
• on August 12th, 2009

As I take a look at the VIx (the index) drop a bit today, a brillant thought comes to mind. We really do parse little moves too much. I am as much to blame as anyone.

If they didn’t have a VIX on our screen, volatility measures would exist anyway. But no one would notice what essentially amounts to noise. I’m talking the one or two point moves that we often see over a day or two. When one of those moves happens to contradict the SPX move, we watch it for some grand signal. But the reality is, we read too much into even that on a 1 session basis. Since we dipped down to these levels about 5 weeks ago, the VIX has basically fluctuated between 23.50 and 26.50. It’s not all that cosmically a different message if we’re on one end of that range or another.

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