The NASDAQ 100 Index rose continuously for several days before snapping on Thursday. However, the sharp rise in the Nasdaq 100 VIX, a market volatility indicator, was a clear sign that fears were rising. Now, the markets seem to be treading with extreme caution as the Nasdaq 100 VIX rose over the past several days.
The coming weeks will see volatility rise in the market. A close watch on the Nasdaq 100 VIX will give us a sense of the market’s mood. In recent years, the NASDAQ has driven global investor sentiment like never before. We must worry about how the bigger firms place their moves. Their moves will have a serious bearing on the global stock market sentiment for a long time to come.
Accepting a polarised market is not a choice anymore. The choice is simple. Either we adapt our investing to this new normal by fashioning strategies that take advantage of the rising volatility or we sit out the entire phase.
Clearly, all indications point to active participation. Even legendary investors like Warren Buffett and the ever-aggressive SoftBank are participants now. Handling volatility responsibly will decide the survival of Robinhood traders and such lesser players.
With so much at stake in options trading, we are probably going to see an ugly spectacle unfold due to Nasdaq volatility. For a while, the VIX rather than the actual index will be the bigger trendsetter.