Fear gauge is on the rise, but not fear itself.

carlzheng

All we have to fear is the gauge itself
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9 F! Z! R" m# C, z& x% tNEW YORK (MarketWatch) -- The VIX, otherwise known as the market's fear gauge, has started to rise again, but the advance seems to be more about waning optimism rather than rising anxiety.
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+ X: b: |8 E1 T" G6 u# u"What's happened is that enthusiasm to increase equity exposure has dropped off in the past two to three weeks, but there's not really any fear, just less optimism," said Ken Tower, market strategist at Quantitative Analysis Service.

" I! M( i$ E) y3 qA sustained rise in the VIX usually accompanies selling pressure, and the gauge usually spikes higher when investors panic. The index is made up of the prices of a range of options which investors buy to hedge their bets. When these options are more in demand and their prices rise, it normally indicates rising nervousness.

As stocks began to mount their huge rally back in early March, the VIX had already started to fall from levels above 50. It reached its lowest levels of the year, below 30, in early June before it started inching higher again, with the occasional spike here and there.
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The VIX would already be going up convincingly if fear was on the rise," Tower said. "But while the buyers have stepped back from the market, we're just in a lull for the optimists rather than an opportunity for the pessimists."