This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Dow 16,000 - The Only Thing We Have To Fear Is Complacency

By Covestor


Should investors be scared by the lack of fear in the stock market as the Dow Jones Industrial Average hits 16,000 for the first time ever?

Clearly, investors are feeling good about stocks now that the U.S. government shutdown is over and amid the perception the Federal Reserve won't taper its bond purchases anytime soon.

The CBOE Volatility Index fell below 12 on Friday for the first time since August. The VIX, Wall Street's so-called fear gauge, is down more than 30% this year.

The VIX is a measure of expected stock market volatility for the next 30 days, and is based on S&P 500 options. Leading the VIX lower in recent weeks is a combination of bullish options bets on the S&P 500 and a relative lack of investors seeking insurance against declines in the stock market, The Wall Street Journal reports. However, the premiums in longer-dated VIX futures contracts suggest that investors see volatility picking up in early 2014 after the holidays.

The VIX rose Monday as U.S. stock indices notched fresh record highs, and traders will be watching to see if the 12 level provides support as it did over the summer. This area has also coincided with peaks in the S&P 500 over the past year and the VIX's low level points to complacency in the stock market, says Investors Intelligence technical analyst Tarquin Coe.

Some investors have been waiting for a pullback to get back into stocks, yet it has been over two years since the S&P 500 has seen a 10% correction from a high. Investors are afraid of buying at all-time highs right before a potential sell-off with the S&P 500 reaching 1,800 for the first time in history.

So what are investors to do? One strategy to overcome this fear is to nibble at stocks with a dollar-cost averaging strategy, rather than buying all at once.


Chart source: Investors Intelligence

Photo Credit: Justin in SD

DISCLAIMER: The information in this material is not intended to be personalized financial advice and should not be solely relied on for making financial decisions. Past performance is no guarantee of future results.


Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,096.90 -106.47 -0.58%
S&P 500 2,098.53 -9.25 -0.44%
NASDAQ 4,967.1410 -12.76 -0.26%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs