10-6-17 7:19 AM EDT | Email Article

By Mark DeCambre, MarketWatch

VIX 'fear gauge' posts lowest close since 1993

A popular measure of Wall Street volatility finished at an all-time low Thursday, highlighting a protracted period of market calm as stocks continue an extended push into record territory.

The CBOE Volatility Index , often referred to as the market's fear gauge, closed at 9.19, which marks the lowest close for the indicator since Dec. 22, 1993, when it ended at 9.31. The indicator was created that same year.

The gauge uses bullish and bearish option bets on the S&P 500 index to reflect expected volatility over the coming 30 days. Because stocks tend to fall faster than they rise, the index is viewed as a gauge of investor fears of a market tumble. It typically moves in the opposite direction of stocks.

Read: Low stock volatility won't last forever, but the quiet may not end quickly (http://www.marketwatch.com/story/low-stock-volatility-wont-last-forever-but-the-quiet-may-not-end-quickly-2017-10-04)

The volatility index is running at less than half its historical average of around 20 and has posted the largest number of prints below 10 in its entire history in just 2017. It has posted 27 closes below 10 so far in 2017, with more than 70% of its finishes at that level occurring this year (see chart below).

The index lows come as some market veterans warn the stock market is on the verge of a meltup (http://www.marketwatch.com/story/why-stocks-may-be-on-verge-of-a-melt-up-2017-10-04), with equities indiscriminately rising to peaks, with few sharp moves lower.

On Thursday (http://www.marketwatch.com/story/us-stocks-set-to-hover-at-record-levels-with-fed-speakers-in-the-spotlight-2017-10-05), the Dow Jones Industrial Average finished with a gain of 113.75 points, or 0.5%, at a record 22,775.39, while the S&P 500 index finished up 14.33 points, or 0.6%, at 2,552.07, marking its sixth consecutive all-time closing high--the longest such streak since the eight session string of closing highs posted in 1997, according to WSJ Market Data Group.

The Nasdaq Composite Index rose 50.73 points, or 0.8%, to 6,585.36, while the index of small companies, the Russell 2000 index logged its own record top, up 4.32 points, or 0.3%, at 1,512.09.

Check out: Dow industrials flirtation with 23,000 is a sign of the stock market's velocity (http://www.marketwatch.com/story/the-stock-markets-velocity-has-the-dow-flirting-with-230000-2017-10-05)

Stocks have shown an uncanny ability to shrug off uncertainty and turmoil, including massive hurricanes in the U.S. and a tense geopolitical environment marked by escalating threats between the U.S. and North Korea.

However, the combination of the fear gauge's extreme readings and the stock market's record run has some investors afraid that a tumble may be around the corner.

-Mark DeCambre; 415-439-6400; AskNewswires@dowjones.com


(END) Dow Jones Newswires

10-06-17 0719ET

Copyright (c) 2017 Dow Jones & Company, Inc.
Copyright 2017 MarketWatch
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