The Chicago Board Options Exchange’s VIX volatility index is often referred to as “Wall Street’s fear gauge,” and it is currently showing that investors aren’t scared.
The VIX currently stands close to its lowest rate since January 2020 — before all the turmoil of the COVID-19 pandemic — and at these levels investors have been happy to push along the equity rally for seven or eight weeks so far.
Over the year the S&P 500 index has added 24%, and the exchange-traded fund that closely follows it — the SPDR S&P 500 (NYSE:SPY) — putting on the same.
But what can it tell us about the future? Any investment tool that claims to accurately predict the future performance of an asset or security is a scam. But, while the VIX index isn’t a precision instrument, it can be a barometer of market sentiment.
Take a look at the chart below, which measures the Barclay’s iPath Series S&P ...