Market Fear Continues to Subside

Often referred to as the fear index, VIX is the ticker symbol for the Chicago Board Options Exchange (CBOE) Volatility Index. It represents one measure of the market's expectation of volatility over the next 30 day period.

About a month ago The Bespoke Investment Group wrote: "the bulls would like to see the index break solidly below 40 for a longer period of time."

And the bulls continue to have their way. As the chart below shows, market fear continues its steady decline, with not only the VIX solidly below 40 for a month, but now approaching 30.

(click to enlarge)
(Source: Yahoo)

With another dive of 3% on Tuesday, readings in the 20s are easily within reach. VIX levels in the 20s were quite common in the late 90s through 2003.

With the DOW approaching 9000, consumer sentiment bouncing, and retail results firming, the VIX trend is yet another pointer to rising economic expectations.