VIX

Wall Street's Fear Factor: VIX Goes Wild!

Wall Street’s ‘fear gauge’ goes wild, sending shockwaves through the market. Here's what you need to know!

Hold onto your hats, Wall Street watchers, because the Cboe Volatility Index (VIX), known as Wall Street’s infamous ‘fear gauge,’ has hit its highest levels since the financial turbulence of 2008. On Monday morning, it briefly broke above 60, a significant leap from about 23 on Friday. This sudden surge is a wild ride that has traders and investors alike on the edge of their seats.

In a week marked by market turmoil, VIX-focused ETFs have seen a resurgence. These funds, which bet on severe stock-market swings, have delivered both breathtaking gains and staggering losses during this rapid downturn. On Tuesday, the VIX experienced its biggest drop ever on a closing basis, a sharp contrast to its sky-high levels on Monday. This rollercoaster ride has everyone wondering, what’s next for the market’s fear gauge?

Adding to the intrigue, the VIX did something on Monday that it hasn’t done since the harrowing days of 2008. During a frantic selloff, the fear gauge soared to levels rarely seen, echoing the chaos of past market crashes. Despite the rising panic, some market pundits suggest that the current VIX levels indicate it may actually be a good time to buy. It’s like finding a silver lining in a storm cloud, but is it too good to be true?

The S&P 500 also felt the ripple effects of the VIX's surge. On Monday, the market crashed over 5% during morning trading, making the VIX’s spike above 65 its third-highest level ever. But as swiftly as the fear ascended, Tuesday saw an equally dramatic fall, with the VIX posting its strongest single-day rally. The market’s reaction over the past 24 hours has been nothing short of a financial thriller.

Fun fact: The Cboe Volatility Index was introduced in 1993 and has since become the world’s premier barometer of investor sentiment and market volatility. Its highest ever level was recorded at 89.53 during the 2008 financial crisis.

Another nugget: During calm periods, the VIX typically trades between 12-20. Prolonged periods below 12 are often seen as signals of market complacency. So, when it breaks well above those levels, you know the financial world is holding its breath!