BI: "Here's how the stock market's fear gauge can signal whether a bubble is forming"

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BI: "Here's how the stock market's fear gauge can signal whether a bubble is forming"

Excerpt from Business Insider quoting DataTrek’s Nick Colas:

…. “As tech stocks march to new all-time highs amid rising COVID-19 cases in the US, investors are questioning whether a speculative bubble in stocks may be forming.

Nicholas Colas, co-founder of DataTrek Research, said on Tuesday that investors can look at the level of the VIX, also known as the fear index, to determine if stocks are in a speculative bubble.

Colas highlighted that near the peak of the the dot-com bubble, the VIX had an average reading of 24.95, relative to its since-inception average reading of 19.8, according to historical data.

Colas said as long as the VIX trends lower to below the 20 level, the stock market is not in a bubble.

The VIX registered a reading of  24.46 on Tuesday, falling 70% from its peak of 80.85 in mid-March”….

Read the full article here on Business Insider!