VIX and S&P 500: Why Bears Should Be Worried
Historically, VIX spikes above 60 have marked S&P 500 bottoms. What does this mean for the current market cycle?
- VIX spikes above 60 have historically signaled S&P 500 bottoms.
- Bearish traders could be caught off guard by a major reversal.
- Volatility often peaks before market recoveries begin.
History Says High VIX Means Opportunity
If you’re betting against the market, you might want to look at the VIX and S&P 500 correlation before going all in. For the last 35 years, every time the VIX—the market’s fear index—has spiked above 60, the S&P 500 has found its bottom soon after.
The Volatility Index (VIX) is widely viewed as a real-time measure of investor fear. While high readings often reflect panic, they’ve also historically signaled moments of maximum opportunity. In fact, past data shows that when the VIX crosses the 60 mark, it typically precedes a strong rebound in equities.
Bearish Sentiment Could Be Peaking
The phrase “this chart will be painful for bears” couldn’t be more accurate right now. Many traders are shorting the market, expecting further declines. But if history holds true, they might be caught on the wrong side of the trade.
During previous crises like the 2008 financial crash and the COVID-19 selloff in 2020, VIX spikes above 60 closely aligned with major bottoms in the S&P 500. Once the panic peaked, stocks began to recover—fast.
This recurring pattern suggests that extreme fear doesn’t just spell trouble—it might actually mark the turning point for bullish investors.
What to Watch Going Forward
The takeaway? Keep an eye on volatility. While a soaring VIX can seem alarming, it often represents capitulation—the point where fear is highest and selling is exhausted. For savvy investors, that could mean it’s time to position for the next leg up.
The VIX and S&P 500 relationship is a reminder that markets are cyclical, and sometimes, maximum fear leads to maximum profit—for the bulls, not the bears.
