Why is vix going down

Contrarian investors — who look for market opportunities by going against conventional thinking—consider a low reading on the VIX to be a bearish signal, indicating market complacency that may spell bad news ahead, while a high VIX reading is believed by some to be a bullish signal.

That said, research shows stock markets, on average, tend to perform better following low VIX readings compared to high ones. Options prices are based on a number of factors, including investors' expectations of market volatility between the current date and the expiration date. The VIX is, by nature, volatile; therefore, trading it is speculative. As such, self-directed investors should do their own research and ensure they're comfortable with the risks of losing some or all of their initial investment.

For those who are comfortable with the risks associated with these kinds of investments, while you can't buy the VIX in the same way you can buy a stock or bond, you can invest in instruments that respond to its fluctuations, such as the CBOE's VIX futures and options. With stocks, you have ownership in a company, while options are contracts that give you the right to buy or sell a stock at a certain price on or before a certain date.

Therefore, the positive correlation could turn out to be very short-lived. Still, negative news on China trade has done little to lift market volatility recently.

On Wednesday of this week, the Dow Jones Industrial Average fell about points on report that the completion of a limited trade deal won't happen this year as China insists on more extensive tariff rollbacks. The VIX initially popped to about 14 when the headline hit, but actually finished the day lower. Stocks surged to record highs last week after after White House economic advisor Larry Kudlow said the two countries were "getting close" to reaching a trade deal.

Markets have been moving higher every time the Trump administration touts positive development on trade with China. ET by Joy Wiltermuth. Opinion As stock-market bulls keep pushing, watch for these technical levels Sep. Barron's Getting Nervous? No Headlines Available. Other News. ET on InvestorPlace.

Volatility Is Our Friend Feb. ET on Zacks. Stock Market News for Jan 18, Jan. Key U. Other U. Total Stock Market Index 48, Chrome Safari Firefox Edge. Dow Jones Industrial Average.

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