January and early February offered some rough times for investors. The two-week meme stock debacle had most investors’ hearts skip a beat and fear the entire market was in a bubble. However, applying some cold, rational logic to market movements yields a very nice picture. The reality is that VIX Index, Wall Street’s so-called fear gauge, just fell below 20. To put that in perspective, it is the first time that has happened since February 2020 (yes, BEFORE the pandemic). This means fear is leaving the market and could set the stage for more buying. According to one Wall Street strategist, “This is a positive divergence. Stocks churning but VIX falling. This suggests that ‘fear’ is receding from the market”.
FINSUM + Magnifi: This is one of the strongest “buy” signs we have seen in many months. Despite all the anxiety since the start of the new year, the reality is that investors are settling down and the market is normalizing. If you couple that psychology with new stimulus, you have the makings of a great bull run.
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