While observers have been warning of an imminent economic recession that could drag down the markets, the CBOE Volatility Index, or VIX, and related exchange-traded funds remain relative lax, reflecting ongoing complacency in equities.
Year-to-date, the iPath Series B S&P 500 VIX Short Term Futures ETN [VXX] increased 18.5% and the ProShares VIX Short-Term Futures ETF [VIXY] fell 4.7%. Meanwhile, the CBOE Volatility Index is now hovering around the 21.5 level, recently dipping below its long-term support at the 200-day simple moving average.
VIX readings above 20, such as what we are experiencing now, reflect a heightened sense of fear over the short-term outlook, but it is still nowhere near the readings above 35 earlier in the year or the spike up to 85 during the height of the COVID-19 pandemic. Nevertheless, the VIX remains above its long-term median range of 17.7, indicating ongoing concerns for the market outlook.
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