VIX drops 10% amid Wall Street rebound attempt🗽

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