VIX Remains Subdued and Signals a Continued Bull Market

The VIX index dropped back below 20 on October 14 and signals a continuation of the bull market and a move back into the more risky stocks that drove the early gains in 2024.

The VIX, which is a measure of the market's expectations of future volatility based on S&P500 option prices and serves as a barometer for market volatility, has been in a broad trend decline since its dramatic spike to almost 40 in August.

“The more risky high-beta stocks such as NVDA are notching strong gains as the market moves back into a risk-on mode” notes Michael Hanson, CTO of FirstRate Data. Other large-cap tech stocks such as Apple (AAPL), Microsoft (MSFT), and Amazon (AMZN) are also benefiting from the risk-on environment.

The VIX has been below 25 since its dramatic peak in early August when weak economic data and an unwind in the yen carry trade caused the market to price in the risk of a recession. The market has since been reassured by strong Q2 earnings data, moderating inflation and stronger employment data.

The low volatility environment is also a tail-wind for the high-beta large financials such as JP Morgan (JPM), Bank of Amercia (BAC) and Citigroup (C) which are all up over 5% in the last week.

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