The below chart is a ratio between the S&P 500 and the CBOE Volatility Index (VIX).
When the black line is rising, it indicates the S&P 500 (as well as the Nasdaq/QQQ and even the Dow Jones) are generally moving in a positive direction. When the black line is falling, it indicates fear is beginning to rise and can foreshadow a period of consolidation or weakness in the marketplace.
The VIX is a measure of anticipated volatility in the market and is often referred to as the “fear gauge.”
Note: if the line is falling (fear is rising), the market can continue to climb for some time before any broader consolidation or weakness appears. This shift tends to develop beneath the surface before becoming visible in price.
In simple terms, the VIX tends to rise when downside protection (put options) is being purchased more aggressively than upside exposure (calls).
The below chart is a forecast completed on March 1st, 2026. The forecast is designed to highlight when market conditions are likely to begin shifting toward a more defensive or “fear-based” environment. Knowing when the VIX begins to strengthen relative to the S&P 500 can help identify when risk is increasing beneath the surface.
The data in the blue shaded area is “out of sample” and is not influencing the forecast. The final results of this forecast will be published on June 1st, and a new 3-month forecast will be run, published, and announced at that time.
Chart expands upon click. Members must be logged in to view full forecast.
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