Stocks and ETFs put in an impressive rally while VIX and silver crater
It was an impressive day for stocks and ETFs today as markets reacted to good news on retail sales and then cheered the Federal Reserve statement which said nothing nothing new or unexpected but reconfirmed easy monetary policies until late 2014.
The Fed said that it sees the economy improving slowly while unemployment remains high.
The Fed was expected to keep interest rates unchanged and says that rising energy prices, particularly oil and gasoline, is a temporary phenomenon, leading to temporary price hikes but having no impact on long term inflation.
The VIX, the CBOE S&P 500 Volatility Index fell sharply again this morning, falling to 14.58, down 6.8%.
The index now has returned to levels seen in 2007, below the financial crisis and during a very powerful bull market.
So what is VIX telling us?
Markets are extremely complacent.
Volatility is at levels seen during times of extreme positive sentiment.
The “fear” indicator says there’s nothing to fear.
People are expecting equity prices to continue to rally, that the Federal Reserve has its “put” in place and seems ready to do whatever it takes to keep stock and ETF prices rising.
Retail sales climbed 1.1% to $407.8 billion last month and December’s and January’s numbers were revised upwards, as well.