Chart of the Day - Tuesday, December 12, 2023

Today’s Chart of the Day was shared by Caleb Franzen (@CalebFranzen). The Volatility Index ($VIX) fell to a 4-year low of 12.08 today. Caleb jokes that we're probably not in a recession if the $VIX is at multi-year lows. This further proves that a new bull market is underway, as volatility tends to contract once an uptrend is established. Some interpret this as a lack of fear among market participants. However, despite being called the "fear gauge," the VIX isn't necessarily a sentiment indicator. It's designed to measure the market's expectation of future volatility. By definition, the current reading of 12.08 means that the market expects a daily move of 0.75% in the S&P 500.