Markets go through different cycles, both taking on uptrends and downtrends as money needs to exchange hands from sellers to buyers and vice versa. However, there is another cycle that needs to be considered by both investors and traders, and this is the one that can often define the fate of portfolios and retirements moving forward. This cycle measurement is volatile. Through the widely known volatility index (VIX), investors can benchmark how calm (or fearful) the market is currently.
Not only does the VIX measure the psychological state of the market, but it also often dictates where capital flows in and out of, sort of in a systematic way that is becoming increasingly the normal operating mandate at investment banks and other entities in the market. Now that the index is starting to trend in a specific direction higher, capital might flow into (and out of) in the coming months.
