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VIX: Seller Beware

It is amazing what a new year and abundant investor liquidity can do.  Despite the tax increase that really does nothing material to balance the budget, the markets have sighed a major relief rally early in 2013.  One of the most striking results has been a significant decline in the VIX:

On Friday, the VIX hit an intra-day low of 13.64 which is a hair away from the multi-year low of 13.39.  This occured despite historic realized 10 day volatility of about 19%, 20 day volatility of 15.4% and 50 day volatility of about 14%.

With the debt ceiling debate coming to the forefront, I would imagine that a decline in the VIX from here is exceedingly unrealistic.

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