'Fear Gauge' Hits New Highs as Dow Plummets

The CBOE Volatility Index (VIX) is trading in territory not charted since late 2011

Andrea Kramer
Oct 15, 2014 at 10:26 AM
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It's been a volatile couple of weeks for U.S. stocks, and the recent downward momentum is continuing this morning. Amid escalating concerns about Ebola, plunging crude oil prices, and a flood of downbeat economic data -- including significant monthly drops in U.S. retail sales, producer prices, and New York area manufacturing -- the Dow Jones Industrial Average (INDEXDJX:DJI) was down nearly 370 points out of the gate, briefly breaching the 16,000 level to trade in territory not charted since mid-February. At last check, the blue-chip barometer has pared its deficit to 159 points, or 1%, to trade at 16,156.47, while the CBOE Volatility Index (VIX) -- also known as the market's "fear gauge" -- has skyrocketed amid huge volume, and the yield on the 10-year Treasury note is south of 2% for the first time in more than a year.

Specifically, the VIX jumped as high as 28.10 in early action, topping 28 for the first time since late 2011, but was last seen 13.4% higher at 25.84. Furthermore, more than 100,000 VIX futures traded within the first half-hour of trading, according to Russell Rhoads at the Chicago Board Options Exchange (CBOE). So far this month, the VIX has surged more than 58%, as the Dow and S&P 500 Index (SPX) have surrendered 5.2% and 5.7%, respectively. The tech-rich Nasdaq Composite (COMP), meanwhile, is on pace for the worst monthly hit, down 6.6%.

On the New York Stock Exchange, 2,404 equities are trading lower, compared to just 558 bucking the trend, resulting in an advance/decline ratio of 0.23. Likewise, 514 stocks have tagged new annual lows, compared to 11 scoring fresh peaks. Doral Financial Corp. (NYSE:DRL) is among the worst performers on the Big Board, down 8.2% at $6.14, after surging earlier this week on a favorable tax ruling. For the week, however, DRL remains 16.3% higher.

It's a similar setup on the Nasdaq, with 634 stocks trading higher, compared to 1,698 in the red, resulting in an advance/decline ratio of 0.37. Just 10 securities have notched new highs, while 227 are trading in new-low territory. The heaviest-hit on the index is U.K. drugmaker Shire PLC (ADR) (NASDAQ:SHPG), amid reports that its merger with AbbVie Inc (NYSE:ABBV) is in jeopardy. At last check, SHPG has plummeted 22.3% to $190.07.


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