Regulator Looks Into Alleged Manipulation of VIX, Wall Street's 'Fear Index'

Regulator Looks Into Alleged Manipulation of VIX, Wall Street's 'Fear Index'

It comes after a period of becalmed markets, with volatility falling to historic lows for an extended period of time. This is a momentum indicator that is the inverse of the Fast Stochastic Oscillator. At +100 there is a maximum positive correlation between rising price and date. A reading from -80 to -100 would signal an oversold situation.

Needle moving action has been spotted in VIX Mid-Term Futures ETN Ipath (VXZ) as shares are moving today on volatility -0.38% or -0.08 from the open. Taking a glance at the relative strength indictor, we note that the 14-day RSI is now at 56.44, the 7-day stands at 52.73, and the 3-day is sitting at 36.86.

The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of stock price movements. The RSI operates in a range-bound area with values between 0 and 100. Many traders keep an eye on the 30 and 70 marks on the RSI scale. Developed by Donald Lambert, the CCI is a versatile tool that may be used to help spot an emerging trend or provide warning of extreme conditions. On the other end of the spectrum, if the indicator goes under -80, this may show the stock as being oversold.

The Cboe Volatility Index, known as the VIX, is derived from S&P 500 options prices. Active traders might be following the signal in order to determine if the stock has entered into a buying territory. CCI may also be used to help discover divergences that could possibly signal reversal moves. Some will argue that it is never a bad thing to take profits when they are on the table, but this can leave the investor with a large amount of regret if the stock continues to surge after selling.

Taking a deeper look into the technical levels of Fossil Group (FOSL), we can see that the Williams Percent Range or 14 day Williams %R now sits at -8.14. This indicator compares the closing price of a stock in relation to the highs and lows over a certain time period. After a recent check, the 14-day RSIfor Echo Global Logistic (ECHO) is now at 55.69, the 7-day stands at 57.27, and the 3-day is sitting at 70.24. S&P 500 VIX Inv S/T Fut ETN II Ipath (IVOP)'s Williams %R presently stands at 0.00.

Although it is not surprising that an inverse exchange-traded fund would lose almost all its value should the underlying security appreciate over 100% rapidly, we contend that market manipulation is playing a significant role in driving the price of VIX ETPs. A reading between 0 and -20 would point to an overbought situation. A reading under 30 may indicate that the stock is oversold, and possibly undervalued.

"The ProShares Short VIX Short-Term Futures fund, which lost more than 80 percent of its value on February 6, took in the most cash on record last week", reports Bloomberg. Many chart analysts believe that an ADX reading over 25 would suggest a strong trend. A value of 25-50 would support a strong trend. A value of 50-75 would identify a very strong trend, and a value of 75-100 would lead to an extremely strong trend. ADX is used to gauge trend strength but not trend direction. Traders may also use the reading to identify overbought/oversold conditions. Moving averages are considered to be lagging indicators meaning that they confirm trends. On the other side, a stock may be considered to be in a downtrend if trading below the moving average and sloping downward. Many traders will use a combination of moving averages with different time frames to help review stock trend direction. After a recent check, the 200-day MA is resting at 93.74, and the 50-day is 109.79.

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