How to Protect Your Portfolio as Volatility Rises
NEW YORK ( TheStreet) -- With the uncertainty of the fiscal cliff, possible higher tax rates and doubts about the viability of Greece as a member of the EU, volatility is priced relatively cheap right now and could possibly spike.
Although there was a rise in recent weeks, the cash VIX -- an index of volatility -- has so far continued to hold resistance around 19 to 20. My question is: Will it be able to hold this area on additional attempts? I don't think so. To me, the market just appears to be too complacent and that, often times, spells trouble.
Now don't get me wrong. I do not believe VIX to be the holy grail indicator that many think it is. It is far too limiting, and many other factors must be taken into consideration when looking at volatility. That being said, I do believe that volatility has been in the process of carving out a bottom for some time.
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