What is this indicator?  Click for explanation.

Click to view the chart.         

THIS PAGE IS SUPPOSED TO BE OFF-LINE.  PLEASE DISREGARD IT

Volatility Measurements

Market Volatility (VIX) And The 20-Day Volatility Index

Each of the above charts is labeled. The VIX is a measurement of "implied risk" and differs from the other measurement in that it is not a direct measurement of price volatility. The VIX is related to the demand for puts and calls and their prices. Traders associate readings above 45 with investor fear. At these levels, we tend to see capitulation selling. People are giving up what remains of their positive attitudes about the market. This is seen as positive because it often means the market is bottoming. A reading of 30 is associated with high volatility (there is heightened fear and uncertainty in the market). Readings in the range of 20 to 25 are usually associated with a casual nonchalance on the part of investors. Readings below 20 tend to correspond to a lack of investor "enthusiasm" (the market may be nearing a top). In general, the VIX tends to increase as the market declines and decrease when the market is rising. Why? When the market is rising, it is believed to be less risky but more risky if it is on the way down.

The purpose of the Volatility Index is to let us know if the price action is becoming increasingly "frenzied" or "calmer" within a larger historical context.  Here we begin our measurement by computing the standard deviation in closing prices over the last 20 days.  For a historical context we use the 100-day average of the 20-day standard deviation.  This enables us to see how the current 20-day standard deviation compares to its average over the last 100 days. 


Links To Other Places On This Website 

Home   Market Review   RC Allen Alerts   Price/Volume Surges   Stock Scanner   Momentum   Strongest ETFs   Breakouts   Strongest Stocks   Stop Losses   Stops   Tutorials 1   Tutorials 2   Products   The Valuator   StockAlerts   Refund Policy   Index/Directory  
     . 

All pages on this website are protected by copyright
Copyright © 2008 - 2017 by StockDisciplines.com
No part of this publication may be reproduced or distributed.

-
StockDisciplines.com
1590 Adams Avenue #4400
Costa Mesa, CA 92628 USA.
 .

Trading and/or investing in the securities markets involves risk of loss. This website NEVER recommends that ANY individual buy or sell ANY securities.  It does not give individual investment advice, and nothing herein should be interpreted as if it does. Readers of this site's content should seek advice from a licensed professional regarding their personal investments. StockDisciplines.com will not be responsible for any loss that results from using information provided on this website.

IMPORTANT NOTICE


By using this site, you agree to our Terms of Use and Privacy Policy.  See them by clicking on their links near bottom of menu on left side of every page.