The CBOE Volatility Index (VIX) traded down to 11.03 on April 17, 2019. That was the lowest the VIX had declined since August 9, 2018 when it fell to 10.17. Many traders and investors view the VIX as a fear gauge for the markets. Simply put, when the VIX increases, it generally means that market participants are fearful. On the flip side, when it declines it tells us that market participants are generally relaxed, calm and often complacent. Recently, the VIX surged to 23.38 on May 9, 2019. Since that high in the VIX it has been declining. As of mid-day Wednesday, the VIX was trading down around 16.90 and the markets were rallying higher.
What's Ahead?
As you can all see, fear in the marketplace has subsided for the time being. Will the VIX surge again? In my humble opinion, it will and it will do sooner than later. In the past, whenever the VIX has breached the 20 level it will usually do so again withing the next couple of months – if not sooner. So enjoy the relief rally in the markets from the recent oversold condition as it may not last that much longer. 