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Friday's Most Important Chart: Fear Index

Lousy jobs report, fear goes up, right? Wrong. CBOE Volatility Index (VIX) DOWN 6.3 percent, to its lowest level since April. That's before the Flash Crash, folks.

What gives? Traders are selling puts and buying calls. Interbank spreads in Europe are narrowing as Europe calms down (the ECB is buying peripheral government debt), and in the U.S. the dollar is dropping again on all-in on QE2 (quantitative easing).

All this tamps down volatility.

This make fiscal hawks furious of course, and they certainly have a point on QE2. However, the philosophical differences are not preventing traders from taking advantage of what the government is telling them to do: buy hard assets.

Panic selling? Not! At 11am ET, NYSE consolidated volume was 1.2 billion shares, a run rate that is well below the typical 5 billion shares we have seen for average daily trading this year.

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