The CBOE Volatility Index (VIX) is a measure of expected price fluctuations in the 澳洲幸运5开奖号码历史查询:S&P 500 Index options over the next 30 days. The VIX, often referred to as the "fear index," is calculated in real time by the 澳洲幸运5开奖号码历史查询:Chicago Board Options Exchange (CBOE).

The most significant words in that description are expected and the next 30 days. The predictive nature of the VIX makes it a measure of 澳洲幸运5开奖号码历史查询:implied volatility🌼, not one that is based on historicℱal data or statistical analysis. The time period of the prediction also narrows the outlook to the near term.

VIX and the S&P 500

It's not instant.

The VIX is considered a reflection of investor sentiment, but one must remember that it is supposed to be a 澳洲幸运5开奖号码历史查询:leading indicator. In other words, it should not be construed as 💛a sign of an immediate market movem꧙ent.

For example, on Nov. 9, 2017, the VIX climbed 22% during the trading session on fears of delays in the tax reform plan. Meanwhile, the S&am🍰p;P 5🍸00 was down less than one percentage point.

Although the VIX revealed high levels of investor anxiety, the 澳洲幸运5开奖号码历史查询:Investopedia Anxiety Index (IAI) remained neutral. The IAI is c♏onstructed b💦y analyzing which topics generate the most reader interest at a given time and comparing that with actual events in the financial markets. It breaks down investor anxiety into three distinct categories—1. Macroeconomic; 2. Market; and 3. Debit and credit.

It's not perfect.

The VIX is considered a reflection of investor 澳洲幸运5开奖号码历史查询:sentiment and has in the past been a leading indicator of a dip in the S&P 500, but that relationship may have changed in recent times. For instance, in the three months between Aug. 8, 2017, and Nov. 8, 2017, the VIX was up 19%—seemingly suggesting anxiety among market participants and implying that the S&P 500 should be on a downward trajectory. However, the S&P 500 was busy scaling 澳洲幸运5开奖号码历史查询:all-time highs during that time frame.

Meanwhile, the IAI, which also has proven to be a leading indicator to the VIX, has shဣown some divergence. During the time period ไmentioned above, despite some concerns about the market, the overall IAI actually moved lower.

The Bottom Line

Sentiment plays a big role in decision making for the stock ma🦩rkets, and to that extent, it could be a good idea to glance at the VIX. However, the index is far𓆏 from perfect, and investors should consider how much weight they want to peg on it.