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The stock market and its correlation with the VIX volatility index for a potential bottom

Stock market and the VIX index

The stock market might not bottom until the VIX comes down — here’s why the volatility gauge remains stubbornly high. An interesting article about the stock market, the VIX volatility index and a potential bottom for the market. Investing continues to be volatile as of the latest days.

Key investing point:

“Here’s one reason stock-market investors aren’t convinced the bear-market rout triggered by the global COVID-19 pandemic hasn’t bottomed out: a stubbornly high reading for an index known as the VIX.”

Source: MarketWatch

The VIX index

The VIX index year-to-date chart
The VIX index year-to-date chart

Source: Yahoo Finance

Actually the VIX volatility index has declined for its high price near 83 and now is at 58. But still above the mentioned 50 price level.

Bonds and the stock market

We will add that if a bottom is to be formed for the stock market, chances are that we should see a rise for bond yields or a decline for bond prices. Yet as of today at 3:08 PM, Monday, March 30, 2020, ET time the 10-Yr Bond yield is at 0.6710,-0.0780(-10.41%). There seems to be still a lot of uncertainty for financial markets and the stock market. If there is a shift to risk-on sentiment, then the stock market should bounce even more from its recent lows. But or financial analysis and opinion are that the earnings season next month will reveal a lot about the coronavirus effects on the economy and profitability of companies, business, and economic conditions. If the stock market has not yet fully discounted these results, we could see sustained increased volatility during April for stocks, as the earnings reports will be released. For now stock trading, stock investing continue to be volatile.



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