Chart of the Day - Tuesday, October 10, 2023

Today's Chart of the Day was shared by Callie Cox (@callieabost). The S&P 500 pulled back as much as -7.8% from its late July peak (on a closing basis). Meanwhile, the $VIX has remained relatively calm during this pullback, reaching just 19.78 at its closing highs last Tuesday. Callie points out that the $VIX has never seen a more muted response to a pullback of this magnitude. In a blog post today, another brilliant analyst, Chris Ciovacco, examined this data point further. He looked at the worst declines in the S&P 500 over the past three decades and found that the $VIX is usually above 31 after an initial -7.83% drop. While this is just one of many data points to consider, it's further evidence that we're in a normal correction versus a bear market decline.