- Summary:
- VIX Index has recently bounced after hitting its 4-year lows. If it reclaims 14 points support, the markets may experience a correction.
The VIX index is a gauge of the true sentiment of the stock market volatility. The index shows the amount of fear and the probability of wild swings in the market at any time. Currently, the index is recovering after hitting its lowest level in the last four years earlier this month.
Historically, during strong uptrends, VIX keeps trending lower as investors feel more confident about the stock market. On the other hand, the volatility index soars whenever sudden down moves occur in the market.
Therefore, the current value of 13.24 points indicates that the market sentiment is very positive and the uptrend is likely to continue. However, the recent bounce from a very strong support zone suggests that a correction could be around the corner.
The S&P 500 index is hovering less than 100 points below its 2022 all-time high. At the same time, the Dow Jones Industrial Average and the Nasdaq 100 index are also hovering at their highest level. However, the overall US economy is far from goldilocks.
It is evident from the following chart that the VIX index is attempting to reclaim the 14-point level. If the index breaks above this level, the S&P 500 index might be poised for at least a short term pullback from current levels.
