S&P 500: From fear to opportunity

The reversal in the normal VIX and S&P 500 relationship from March 20 to April 6 portrayed the psychological shift in the equity market from fear to opportunity, an insight that was an excellent and timely indicator of the equity reversal, FXStreet’s Joseph Trevisani reports.

Key quotes 

“On nine of the 11 sessions from March 20 to April 6 the VIX and the S&P, higher or lower, moved in tandem.”

“The selling panic became grossly overextended. In technical terms, the market was oversold but psychologically enough traders must have realized that further selling was an opportunity, not a threat.”

“Further selling was a positive development and positives bring down the volatility index.”

“For the professionals and money managers, a 31% decline in four weeks is a rare, a very, very rare opportunity to buy vastly undervalued stocks and set up a year of stellar performance.  They needed to buy into the market in the fastest, most efficient and profitable way.”

“Every purchase was a calculated risk and every rise in the market made those risks more imperative and harder to execute.”