VIX Index Today: Could Latest Drop Signal a Stock Market Rise? – InvestorsObserver

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The CBOE Volatility Index (VIX) has been plummeting lower, now trading near $18. With the decline in the VIX index today, it’s now down 4% on the session. In a twist of irony, this is the lowest reading it has given since Jan. 13, 2022 — exactly one year ago.
Equities were mixed on Friday, as the S&P 500 and SPDR S&P 500 ETF Trust (NYSEARCA:SPY) are about flat. An in-line inflation report on Thursday left stock markets slightly higher. However, bank earnings on Friday morning had the indices lower to start the day.
Meanwhile, the VIX tumbled more than 10% on Thursday and is down more than 16% so far for the week.
The fall likely has some investors looking for a continued rally in the stock market. Commonly referred to as the fear gauge, the decline in the VIX translates to a “decline in fear” for many investors, which translates to “higher stock prices.”
What it actually means is that investors expect a decline in volatility over the next 30 days based on SPX options pricing.
The VIX should not be an end-all, be-all indicator for investors. As we broke down yesterday, the VIX is simply a tool to incorporate into one’s overall market assessment. According to the CBOE:
“The VIX Index measures the level of expected volatility of the S&P 500 Index over the next 30 days that is implied in the bid/ask quotations of SPX options. Thus, the VIX Index is a forward looking measure, in contrast to realized (or actual) volatility, which measures the variability of historical (or known) prices.”
In other words, “the VIX Index is intended to provide an instantaneous measure of how much the market thinks the S&P 500 Index will fluctuate in the 30 days from the time of each tick of the VIX Index.”