Finance1 min read

Wall Street's fear gauge may be flashing a buy sign

By · Published by Everything Blog

In short

The Cboe Volatility Index logged its largest single-day surge since April 2025, climbing over 11 points to reach 28.2. Although the average one-month performance following comparable volatility spikes has dipped negative 0.4%, the S&P 500 historically generated positive returns 79% of the time after six months. Thursday also marked only the thirteenth time in stock market history where the S&P 500 dropped 4% as the Nasdaq 100 sank 6%.

Key points

  • Historical trends indicate the S&P 500 gained median returns of 4.8% six months after sim…: Historical trends indicate the S&P 500 gained median returns of 4.8% six months after similar volatility spikes.
  • Near-term turbulence remains possible as the index has averaged a 0.4% decline in the imm…: Near-term turbulence remains possible as the index has averaged a 0.4% decline in the immediate month following such jumps.
  • Heavy put volume indicates that options traders stayed aggressively bearish on semiconduc…: Heavy put volume indicates that options traders stayed aggressively bearish on semiconductor equities through the market close.

Sources checked by our analysis pipeline: 1

There's nothing like a good selloff to turn a trader into an investor – so the saying goes. It's an adage that echoes the sentiment of an even older one: buy when there's blood in the streets.

The maxims ring true after Thursday's selloff in stocks that sent the Cboe Volatility Index (VIX) to its biggest one-day move since April 2025's "Liberation" week for tariffs, according to data from Bespoke Investment Group.

In the 19 instances since 1990 in which the VIX rose at least five points from under 20 – it surged more than 11 points from 16.6 to 28.2 Thursday – the median return for the S&P 500 Index three months later was 4.2%, and 4.8% six months later, according to Bespoke analysis that also showed returns were positive 68% and 79% of the time over each period, respectively.

"These types of sharp spikes from placid levels are like a line of thunderstorms coming through in summer," said Paul Hickey, co-founder of Bespoke. "The sky quickly darkens and wind gusts, but the loudest thunder and brightest lightning doesn't…

Finance