Investors Vexed By Vix


Despite the recent move higher in stocks, the Vix remains at elevated levels, typically that's a reading around 40.

The Vix, the familiar name for the Chicago Board Options Exchange Volatility Index measures the perceived level of fear in the markets. And when the S&P advances like it has recently, the Vix should be coming down not moving sideways.

In fact, on CNBC’s Closing Bell Karen Finerman explains that “normally when we see a move like we’ve had in equities the Vix comes in dramatically. That hasn’t happened.” Instead, the Vix has remained over the critical 40 level.

What does that mean? “It says this is still a very nervous market,” explains Finerman.

And why does that matter?

Because the market has been shrugging off a spate of bad news lately. And it begs the question, how much longer will it continue to do so?

If the action in Vix is any indication, probably not a whole heck of a lot longer. The inability of the Vix to come back down suggests “if we have a few bad pieces of data the market could move back down," says Finerman.

What's the bottom line? Trade cautiously, the market could turn lower rather violently. "I'd be afraid to jump into this market with both feet," says Finerman.

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Trader disclosure: On Apr 3rd, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (WFC), (AAPL), (GE), (GS), (MOS); Seymour Owns (AAPL), (AA), (EEM), (FCX), (FXI); Finerman Owns (BAC) Preferred; Finerman's Firm Owns (MSFT), (RIG); Finerman's Firm Owns (WFC) Preferred, (BAC) Preferred; Finerman's Firm Is Short (IJR), (MDY), (SPY), (USO), (IWM), (BAC), (BBT), (WFC); Terranova Owns (JOYG), (X), (IBM), (XOM), (HES), (POT), (DIS), (DELL), (JPM), (INTC), (BP); Terranova Owns (COP) Calls; Terranova Owns (BRCM) & (BRCM) Calls; Terranova Owns (WYNN) & (WYNN) Calls; Terranova Owns (AMGN) & (AMGN) Puts with wires