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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED

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To: J. C. Dithers who wrote (37061)	5/19/2001 11:02:33 AM
From: Zeev Hed	Read Replies (2) of 65232

J.C, let me take a "whack" at your question. Both the VIX and the VXN are "measures" of volatility or premium paid in the option market, the former covers all equities, the latter Nasdaq equities only. The the the VIX or the VXN is, the theory goes, the higher the fear in the market, the lower these numbers go, the more complacency. Thus, you may say it is a measure of the market psychology. "Traditional" thinking is that the VIX and VXN are low, the market is topping, when they are high the market bottoming. Personally, I believe that the change in direction of both indicators is more telling than the actual values, but I am in a minority (possibly of one) in that interpretation. I hope that helps. Zeev

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