Mecklai graph of the day: Run up in S&P VIX

Mecklai graph of the day - Run up in S&P VIX

The Volatility Index uses option prices on the S&P 500 stock index to measure the expectations for big swings over the next 30 days. The index climbed consecutively for eight sessions to touch a month high of 20.39 and it has also soared nearly 43 percent this year from low of 14.26 (lowest level since June 2007) that was touched on 26th March 2012. Last week, US monthly job data disappointed the market, raising questions over the momentum of US recovery. At the same time, Europe debt crisis reemerged once again as Spain and Italy bonds yields notched higher.

Global risk sentiment weakened as European issue came back to the fore, which was almost forgotten in the January-March period and mounting evidence of a possible prolonged global economic slowdown. If risk aversion continues to prevail in the coming sessions and riskier assets are persistently beaten up, we may witness further rise in VIX index till this year high of 22.97.

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