I often say that the stock market has two objectives.
- To fool as many people at once as possible.
- To put everyone to sleep or on auto pilot right before a large move in the opposite direction starts.
Watching the stock market this week has been about just as exciting as watching the grass grow. What’s more, about 99% of investors out there are incredibly bullish. We are talking about the Dow 20K in a few months kind of bullish.
Has the stock market set its trap once again?
At least according to the Volatility Index (VIX), the answer is YES. As everything else out there, VIX moves in cycles. And with the stock market approaching irrational exuberance levels while triggering multiple overbought indicators, the VIX is approaching the bottom of its trading range. Suggesting, as it did in September of 2014, that fear is about to rear its ugly head. The only question is, are you listening or are you asleep at the wheel?
