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5:28 PM · 17 October 2025

VIX drops 10% amid Wall Street rebound attempt🗽

Key takeaways
VIX
Indices
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Key takeaways
  • VIX falls almost 10% amid US indices trying to recover losses
  • CTAs may sell even more stocks if S&P 500 decline
  • Fund managers have reduced cash and raised equity exposure

The VIX curve briefly inverted, meaning the near-term VIX was higher than futures — a sign traders see short-term uncertainty outweighing long-term risks.

  • Such inversions are rare and often coincide with market stress, but this one is described as mild, not panic-driven.

  • The VIX spot index jumped to around 24, the highest since the last tariff-driven sell-off in April, before stabilizing.

  • Analysts say this move shows that speculative excess has been flushed out, not that a crisis is brewing.

  • Susquehanna Group sees the inversion as a temporary reaction — traders expect turbulence but are not panicking.

  • Historically, most market bottoms happen during VIX backwardation, but those cases usually follow larger S&P 500 corrections (5%+) — unlike the mild pullback now.

  • Analysts caution that if the VIX fell back near 14, it would indicate dangerous complacency returning to the market.

  • Fund managers have reduced cash and raised equity exposure, which could limit buying power on future dips.

  • Commodity trading advisers (CTAs) have limited upside buying potential left, but could sell heavily (up to $46 billion) if the S&P 500 drops another few percent.

  • Overall sentiment: volatility likely to stay elevated, reflecting a market balancing optimism with caution after the tariff-related shock.

 

Source: xStation5

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