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<\/p>\nGood morning, investors. While I don\u2019t expect the AI boom to \u201cpop\u201d like past bubbles anytime soon, I do recommend picking up Andrew Ross Sorkin\u2019s new book, 1929, which details the most consequential collapse in Wall Street history. <\/p>\n
It\u2019s an excellent read, brimming with lessons for investors today.<\/p>\n
Now let\u2019s get to the news.<\/p>\n
Volatility has returned to markets but it\u2019s going to take a lot more jitters to derail this bull run. <\/p>\n
Over the last two trading sessions, regional bank fears tied to Zions Bancorp and Western Alliance pushed the VIX \u2014 Wall Street\u2019s fear gauge \u2014 as high as 28.99 for the first time since April\u2019s Liberation Day sell-off. <\/p>\n
That jump provided just the fodder bearish forecasters have been looking for to bolster their theories of bubbles and crashes. <\/p>\n
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Yet the index closed Friday at 20.78, within range of its long-run average. <\/p>\n
That only feels high because the VIX has hovered at a tepid 17 through most of the summer. <\/p>\n
As it turns out, history suggests the momentary surge in volatility offers a point for the optimists. <\/p>\n
Since the start of 2024, the S&P 500 has averaged a 2.2% gain the next month whenever the VIX rose above its long-term average of 19.5, according to DataTrek Research. <\/p>\n
Stocks have climbed at an 82% win rate with this indicator <\/p>\n
It was triggered each of the last two weeks<\/p>\n
\u201cThe VIX is widely cited and closely watched because most traders know it has a good track record of signaling near term lows,\u201d wrote DataTrek co-founders Nicholas Colas and Jessica Rabe in a recent note to clients. <\/p>\n
The recent move, in their view, does not warrant concern about a weakening bull market. <\/p>\n
CBOE launched the VIX index in 1990, and it\u2019s closed at 19.5 on average over the last three decades. <\/p>\n
In bull markets, volatility is usually below 19.5<\/p>\n
In bear markets, it\u2019s usually above 19.5<\/p>\n
As the DataTrek team and other market veterans have pointed out, heightened volatility indeed often presents a buy-the-dip opportunity. <\/p>\n
Here\u2019s the VIX chart again, highlighting a range of closing levels from the last 12 months.<\/p>\n
![\"\"](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/10\/1760954408_452_1.jpg\")
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When you compare that to the S&P 500 over the last year, the spikes in volatility indeed have marked local bottoms for stocks. <\/p>\n
The above and below charts are nearly inverted mirror images.<\/p>\n
![\"\"](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/10\/1760954408_252_2.jpg\")
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None of the above is likely to placate the bears, who will point to heightened volatility as reason to brace for armageddon.\u00a0<\/p>\n
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