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CBOE volatility index suggests stock market turbulence ahead

Yahoo Finance

Yahoo Finance Live’s Rachelle Akuffo breaks down the chart of the day.

Video Transcript

RACHELLE AKUFFO: All right, time now for our chart of the day. Today we're watching the CBOE Volatility Index, also known as the VIX. Now it measures the fear and stress or implied volatility in the S&P 500. Its price action often shares an inverse relationship with the S&P 500, meaning that when the S&P rises, the VIX falls, and vise versa.

Now, the VIX's most recent decline signals the S&P 500 may rise over the next month. Though technical analysis suggests a bounce could be on the horizon. Now, that could signal an increase in market volatility and cause the S&P 500 to reverse course, suggesting investors may want to consider the well known financial proverb "sell in May and go away."