Wall Street Between Fear and Rally: Expectations and Risks

Signs of a Turbulent Week in US Markets

Recently, American stock markets, particularly the S&P 500 Index, have shown an increase of over 1.2% despite geopolitical risks. However, a noteworthy situation is that while the stock market rises, the VIX Index, known as Wall Street's fear gauge, has also shown an increase. This situation, indicating that investors are positioning themselves against uncertainties, is considered a historic anomaly in the markets.

Fear and Rally: Preparing for a Reverse Relationship

Generally, the S&P 500 and VIX indices move in opposite directions; that is, when one rises, the other is expected to fall. In the last 20 years, there have only been 37 instances where the VIX rose more than 2% while the S&P 500 increased over 0.5%. Experts state that this situation shows that uncertainty is being priced into the market.

Critical Developments on the Horizon

Despite this rise in the markets, investors are preparing for three significant risks along with the rise in the VIX:

• Release of critical employment report this weekend


• Decision of the US Supreme Court regarding Trump’s tariffs


• Increased geopolitical tensions in Venezuela

Low-Cost Insurance Opportunities

The closure of the VIX index at low levels makes it attractive for investors to purchase to protect their portfolios. According to expert commentary, the current situation creates a favorable buying opportunity as there is no extra payment for put options.

Measure of Uncertainty: VIX

The head of Cboe Derivatives Market Intelligence emphasized that the VIX should not be seen merely as a fear indicator. The VIX is a gauge that measures uncertainty and indicates that uncertainty can exist in both directions. It warns that when at historically low levels, percentage increases in scores can appear significant.