Volatility Continues to Fall

Volatility continues to fall as the "summer after the market crash" sees reduced trading and fewer headlines. The VIX was rangebound for several years before Lehman's bankruptcy triggered a massive surge in fear among investors. After topping out just under 90% the VIX steadily fallen back to 25% over the past 7 months. Our expectations for volatility are still quite muted as the summer wears on. We may move slightly higher, pull-in a bit, either way, it does not seem to be the time to make major money in the equity markets. Stocks will likely need a great deal of time to base as investors lick their wounds and regroup allowing economic data to catch up to provide justification for the recent rally off lows.