VIX INDEX SOARS, GOLD PRICES REBOUND, S&P 500 INDEX SWOONS AS RECESSION FEARS RESURFACE
- The VIX Index skyrocketed to a 1-month high as volatility measures jump in response to rising recession fears
- The price of gold[1] jumped over 2% from month-to-date lows as the commodity catches bid from safe-haven demand while risk assets like stocks in the S&P 500 Index spiral lower
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The VIX Index – a popular barometer for investor fear, risk and uncertainty – has been on a tear higher as traders wrestle with the ballooning possibility that the US economy may be on the cusp of teetering into a recession. US recession fears were most recently reignited by a dismal ISM manufacturing PMI report[3] published yesterday, which revealed the US manufacturing sector slipped deeper into contraction territory.
Aside from a surge in the VIX Index to start the fourth quarter, the market’s reaction was quite drastic across the board as the disappointing data fueled a major selloff in the S&P 500 Index and was accompanied by a solid rebound in gold prices. Interestingly, this puts us on pace with historical price action considering October is the most volatile month for US stocks[4] with an average VIX of 21.7 since 1990.
VIX INDEX PRICE CHART: WEEKLY TIME FRAME (APRIL 03, 2017 TO OCTOBER 02, 2019)
Chart created by @RichDvorakFX[5] with TradingView[6]
The VIX Index is currently trading comfortably above the 20.0 handle after smashing through confluent resistance posed by the 17.0 price level, which is underscored by the 78.6% Fibonacci retracement[7] of its “volmageddon” spike back in February last year. It seems