The data below shows that once is drops below 20, going long the market usually pays off. (The CBOE Volatility Index, a.k.a. the “Investor Fear Gauge”aka VIX, measures the market’s expectation for 30 day volatility. A value over 30 indicates high volatility and uncertainty while a value under 20 indicates a more stable market) Combine this data with the less volatile summer and I think a good entry point may be near.

Avg Historical Dow Performance after VIX crosses below 20 (based on 136 occurances since 1986):

  • 1 week later: up 0.1%
  • 1 month later: up .73%
  • 3 months later: up 2.05%
  • 6 months later: up 5.29%
  • 1 year later: up 10.49%