VIX Shocks Like This Have Perfect Record of Signaling a Bounce
- Fear gauge jumped to record close when S&P 500 plunged 9.5%
- Volatility spikes that extreme give way to sharp rebounds
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The historic pummeling in stocks on Thursday sent volatility skyrocketing in a way that has always preceded stock rebounds.
The Cboe Volatility Index, also known as the VIX, closed at the fourth-highest level ever recorded. The gauge has never hit such an extreme point without the S&P 500 “immediately and sharply” bouncing by more than 10% over the next day or two, according to Nicholas Colas, co-founder of DataTrek Research.