The floor of the New York Stock Exchange is occupied by traders.
Spencer Platt is a photographer.
Wall Street's fear gauge went up as much as 51% on Friday due to concerns of a new variant of COVID-19.
The low volatility regime could end in 2021, according to Fairlead Strategies.
This is the level that the stock market needs to close above to signal a difficult 2022.
Wall Street's fear gauge went up as concerns of a highly mutated variant of COVID-19 spread across markets.
The level of fear among investors is measured by the Cboe Volatility index. It jumped as much as 51% on Friday to a high of 28.02.
According to a Friday note, Fairlead Strategies's Katie Stockton believes the surge in volatility on Friday could signal an end to the low-volatility regime in 2021, and the start of a more difficult tape in 2022, which would deliver more than 20% gains for the broader market.
The move higher would be confirmed on a weekly basis if the VIX closes above the key 25 level today and next Friday. The market has entered a high-volatility regime after being in a low-volatility regime for most of the year, according to Stockton.
When the index falls below 20 it can cause quantitative and systematic investment funds to add more equity leverage. The leverage is likely to be pulled back on Friday as the risk-off trade hits everything from airline stocks to the energy sector.
On the flip side, stay-at- home stocks popular with growth investors like Ark Invest's Cathie Wood surged on Friday.
The shortened trading day after Thanksgiving wouldn't prompt Stockton to react quickly, despite the sharp move in stocks on Friday.
Many market players are out of the office, which contributes to low volume and high volatility. "We would not be reacting today, rather waiting for a return to normal volumes next week."
The VIX traded around 25.44 Friday morning, paring its earlier gains.
Markets Insider.
Business Insider has an original article.
