Does a falling 'fear index' suggest a Q4 rally?

Managers are moving back into global equity markets as the VIX ‘fear index' falls from a recent peak.

Signs of a more co-ordinated policy response in Europe have pushed equity markets 10% higher since early October’s lows, a move accompanied by a sharp fall in the CBOE Volatility (VIX) index, commonly known as the fear index for its inverse relationship to movements in the S&P 500. After closing at a historically elevated level of 45 on 3 October, the VIX has fallen over 35%, dropping into the 20s for the first time since the start of August. It stood just above 28 on 14 October, raising hopes investors could face a more settled fourth quarter. “The VIX is still within a range, and ma...