Low Volatility Indicates Upside for Stocks

Halliburton (HAL) EV Energy Partners (EVEP) Noble Energy (NBL) Pioneer Natural Resources (PXD)

The melt-up in the market continues to work, while portfolio protection (i.e., the volatility index (VIX)) is at low levels we haven't seen in years. Recall the common Wall Street adage: "When the VIX is high, it's time to buy; when the VIX is low, look out below." Well, I agree with that axiom, but I don't use it as a timing indicator.

The VIX isn't a timing indicator -- it's an indicator of current conditions in the market. The last time the VIX was so low (January 2007), the market continued to run for nine months before it hit a peak. We have to go clear back to 1994 to find a similarly low reading: January 1994, when the VIX hit 9.82....346 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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