VIX at Level of Concern

The VIX set a low of 23.54 before the market decline in early June. Yesterday, the VIX hit a low of 23.61 (right in the same ballpark). The VIX is better at timing market lows (high VIX) than market highs (low VIX), but the recent readings are a reason to raise our antenna listen closely to what the market is telling us. 

Three factors may be key drivers: 1) Development of a coronavirus vaccine would likely raise investor optimism and allow for more complete opening of the economy and schools, 2) company earnings during the 2nd quarter (being reported now) could be a big disappointment and cause investors to go more to cash, and 3) recent friction with the Chinese (hacking, South China Sea dispute, not reporting earlier on the coronavirus dangers) remains a potential threat to economic stability.

Note: In the evening news, the US and Pfizer have reached a deal for 100 million vaccine doses. (22 July)