Stock market fluctuation definition

How much fluctuation should I expect of the stock market? | Cognitive Investing

Investors may think volatility indicates a problem. But many analysts believe that increased volatility can indicate a rebound. Volatility is measured by the Chicago Board of Options Exchange CBOE , primarily through the CBOE Volatility Index VIX and, to a lesser extent, the CBOE Nasdaq Volatility Index VXN for technology stocks.

Both indices take a weighted average of the estimated volatility of eight stocks on a particular index. Seasoned traders who monitor the markets closely usually buy stocks and index options when the VIX is high. When the VIX is low, it usually indicates that investors believe the market will head higher.

This, in turn, can trigger a market selloff, as speculators try to unload their holdings at premium prices. A high VIX appears just before a market rally, and a low VIX usually augurs a slide.

They say the market is up against too many things, including the economy, wary investors, and ongoing fear of terrorist attacks.

Those are not reliable emotions on which to base long-term investment decisions. All Indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results.