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

While a rising stock market tends to correlate with a falling VIX, the two assets don’t have a direct correlation. Instead, it has more to do with how wide the trading ranges are and what the SPX options market is doing.
For instance, it’s possible for the VIX and S&P 500 to both fall on any given day. Conversely, it’s possible for both to rally as they did on Wednesday, when the VIX rallied 2.5% and the S&P 500 climbed 1.25%.
Admittedly, it’s odd to see the VIX so calm in what many still consider a bear market, particularly as a potential recession looms in the distance. In that sense, many investors will argue that a continued rally in the stock market will likely lead to a further fall in the VIX.
That said, many argue we have not yet seen the bottom in the S&P 500 for this bear market. Part of that thesis rests on the VIX. A recent article reads: “the VIX is a reliable indicator of market capitulation and, therefore, useful for determining whether the bear market has come to an end.”
Further, it suggests that “spikes ‘in volatility have on average come at the same time as the trough in the market,’ they conclude that the bear market has not yet hit bottom.”
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.
The post VIX Index Today: Could Latest Drop Signal a Stock Market Rise? appeared first on InvestorPlace.
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