Wall Street's Fear Gauge Hasn't Jumped Like This Since XIV Died

(Bloomberg) -- The wall of worry is growing taller.

Not only has the S&P 500 Index breached its 200-day moving average, but the Cboe Volatility Index -- the VIX, Wall Street's fear gauge -- leapt from below 15 intraday on Wednesday to above 18 in trading on Thursday.

As Twitter user OddStats notes, the last time this happened in consecutive sessions was Feb. 2-5, when a record spike in the VIX catalyzed the biggest one-day drop in the benchmark U.S. stock gauge since 2011.

The February move heralded the onset of heightened volatility after a prolonged period of tranquility. That volatility tsunami also forced the closure of the VelocityShares Daily Inverse VIX Short-Term exchange-traded notes, known by the trading symbol XIV, and other exchange-traded products that allowed investors to bet on enduring market calm. This week's occurrence of the same dynamic suggests a return to that low-volatility world is not at hand.

Historically, though, such jumps from below 15 to above 18 the next day have marked good buying opportunities. The S&P 500 Index has tended to rise over the following week and three months, based on previous occurrences going back to 1990, according to data compiled by Oddstats and Bloomberg.

To contact the reporter on this story: Luke Kawa in New York at lkawa@bloomberg.net.

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Joanna Ossinger, Brendan Walsh

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