If the Volatility Index (i.e. $VIX or "fear" gauge) was a stock, I'd be starting to buy it aggressively. This is what a long-term chart (12 year weekly chart using a log scale) of the $VIX says to me:
As anticipated, people are starting to think the clouds are breaking up and sunny days are ahead. Me, I see a return to the previous highs in the $VIX and significant new lows in the general stock market indices before 2009 is over. The only question in my mind related to the $VIX chart above is whether or not the previous highs in the $VIX hold. The next wave of this wicked deflationary bear market will catch many by surprise, while others will only be surprised by its intensity and depth. Forget inflation for now - deflation needs its chance in the sun first.
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