Today is the start of the third week since VIX spiked from 17 to 65 within 48 hours. But since then, certain changes in events have led it to move back down to 15. The important question now to ask is what next?
Before going in that direction, it is important to review last week's changes. One of the reasons was the rate hike the Bank of Japan did, it surprised a lot of stakeholders and led to a large negative reaction. This resulted in BoJ officials mentioning that no further rate hikes will occur until the market stabilises. This led to local equity indices rising 22% from the lows.
Another reason was the Iran and Israel escalation but even that has also been paused as Gaza ceasefire talks showed some level of progress last week.
Coming back to the question, will VIX follow the 2021 path where it moves down further till the end of the month or the 2022 path where it moves up from here?
Providing more clarity on the direction this weekend might be more helpful. The most important events due are the Jackson Hole event on Friday and the Gaza ceasefire talks outcome, which will occur around the same time.
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