A view of market risk: VIX over the S&P 500

Our technical analyst Cory Venable gave me an interesting picture this week of relative risk and reward in the S&P 500 today. Dividing the VIX (Volatility Index) by the price level of the S&P 500 Index, we can see buys were triggered for “a trade” in both November 2008 and March 2009. What is interesting now is that with stock prices about 50% higher than March and volatility about 70% lower than the highs of last November, this risk ratio has recently been ticking up again. A third test of the dotted trend line may present another buying opportunity ahead.

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