VIX Index Forecast for August 2022 as S&P 500 Recoils

The VIX index jumped sharply this week after steadily dropping since June. It is trading at $22.85, which is about 7.63% above last week’s low of $21.34. However, this price is about 37.54%, below the highest point in May this year. The rise coincides with the ongoing Dow Jones and S&P 500 sell-off.

Volatility inches up slightly 

The VIX index is one of Wall Street’s most popular volatility gauges. It is used to measure the sentiment among investors by considering activity in the S&P 500 options market. In most periods, the index has an inverse relationship with the S&P 500, Dow Jones, Russell 2000, and Nasdaq 100.

This inverse correlation explains why the VIX declined to the lowest level since April this year in July. During the month, American and European stocks had their best performance since 2020. At the same time, the closely watched fear and greed index moved from the extreme level of below 25 to about 40.

The ongoing earnings season will be the next key catalyst for the Vix Index. More S&P 500 companies are expected to publish their results this week. Some of the most notable firms are S&P Global, KKR, Marriott International, Caterpillar, Molson Coors, Illinois Tool Works, and Starbucks. 

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