OEX / VIX 'Blue Sky Ratio' At Cautionary Levels
"Blue-Sky" Index Is Flashing Red
Nobody may wish to believe it, but, Diapason Commodities' Sean Corrigan warns, it just might be that the US economy has seen its best for this phase of the cycle.
Where does that leave assets? Arguably overpriced and overbought, he believes.
The CBOE Volatility Index (VIX) (VXX) has swooped to a low only once briefly undercut since before the last New Era started to lose its luster in early 2007.
As a result, Corrigan's "Blue Sky" index - the S&P 100 Index (OEX) (OEF) divided by the VIX, being an inverse representation of what people perceive to be the worth of buying price protection - has jumped to the upper third of the ninety-ninth percentile of the past quarter-century's distribution; an anoxia-inducing plane only briefly exceeded just as the first rumblings of the forthcoming doom started to afflict the Boom in the March of 2007.
[BigTrends.com Editor's Note: While this chart is interesting, note that this ratio is likely to make new highs near when the stock market does. And the last burst to highs on this ratio in 2007 far exceeded the levels of 2000.]
OEX/VIX Ratio Chart
Courtesy, Sean Corrigan (Diapason Commodities) zerohedge.com
