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The Cboe Volatility Index, Wall Street’s “fear index,” has skyrocketed and the implications are temporary.
Volatility will flood stock markets within 4 weeks, a strater warns.
Bell added, “Let’s see the rubber hit the road.”
Bell said the biggest dangers of uncertainty to markets are: the upcoming US election, a stimulus package for now to alleviate coronavirus and convention season.
“With increased uncertainty, we’ll see an increase in volatility,” Bell said.”We saw him today. The VIX index is going up.”
The Cboe Volatility Index is a key measure of investor concern in the market.A higher number means a greater belief of uncertainty and threat among investors, and vice versa.
To put this in perspective, the VIX was down at a six-month low of around 21.40 in mid-August, reflecting the development of investor sentiment.
The upcoming U.S. election in November will be thing that will continue to push the index higher.
Bell expects uncertainty to lead to common fluctuations of 1% to 1.5% in major indices in September.
“As we approach the election and some of those other events, this leaves room for this kind of volatility to return to the market,” he said.
Bell’s caution arises despite the explosive expansion of the inventory market in recent months.
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Stocks have been very volatile in months. After reaching coronavirus lows of 2237.40, S
The growing percentage of tech titans such as Tesla and Apple have been the main drivers of the Wall Street uptick to historic highs.
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“You might have to replace the biggest names like Amazon or Home Depot…who have worked very well and have helped bring the sector to smaller names that haven’t done so well from year to year,” he says.
But he warns against taking flight from this year’s acting actions just for fun.
“Stay in some of those expansion and generation spaces that have done well,” Bell said.”They can hide there to a certain extent because they don’t necessarily want economic expansion to go well.”