Has the VIX Peaked? Bespoke Says the ‘Acute Selling Phase’ May Be Over

The volatility index (VIX), Wall Street’s favorite fear gauge, has been on a rollercoaster ride this April. After spiking above 40 in the wake of President Trump’s sudden tariffs announcement on April 2, the so-called “fear index” has now retreated below 30—prompting analysts at Bespoke Investment Group to declare that the “acute phase of the selloff is over.” But what does this mean for investors? And is the market’s panic truly subsiding, or are we just pausing at the edge of a cliff?

The VIX’s Dramatic Whiplash

The VIX’s recent behavior has been historic. After climbing 23 points in five days—the second-largest such surge on record—the index then plunged 23.6 points over the next five sessions (as of April 15), marking what Bespoke calls “the second-fastest reversal in its history.” This extreme volatility mirrors the market’s wild swings: the S&P 500 plummeted 10% over two days (April 3–4), only to stabilize and rally slightly by mid-April.

Crucially, Bespoke notes that such sharp declines often precede market bottoms. The firm’s research shows that the S&P 500’s 10% two-day drop in early April mirrored similar collapses in October 1987, November 2008, and March 2020—all of which occurred near major lows. While past performance doesn’t guarantee a rebound, Bespoke argues these episodes suggest “worst-case scenarios may already be priced in.”

Technicals and Sentiment Signal Exhaustion

Two key factors support the idea that panic is waning:
1. Capitulation indicators: The CNN Fear & Greed Index hit its highest fear level since the pandemic crash, while NYSE trading volume surged to its highest since Japan’s surprise rate hike in August 2024. These extremes often mark inflection points.
2. VIX reversal: The index’s drop below 30—combined with a narrowing put/call ratio—suggests short-term panic is easing, even if longer-term uncertainty persists.

Risks Remain, but the Acute Phase Is Over… For Now

Bespoke’s cautious optimism hinges on the idea that markets have absorbed the immediate shock of tariff uncertainty. However, the firm warns that the path forward is fraught with risks:
- Geopolitical tensions could reignite
- Earnings season may expose corporate vulnerabilities
- The Fed’s next moves remain unclear

Yet the historical parallels are striking. In March 2020, the VIX spiked to 82 before collapsing as markets stabilized—a pattern Bespoke sees repeating today. Similarly, after the 2008 crash, the S&P’s 10% drops often preceded short-term bounces.

Conclusion: A Fragile Calm, Not a Green Light

Bespoke’s analysis paints a nuanced picture. The acute phase of panic-driven selling likely ended by mid-April, as evidenced by the VIX’s retreat and historic volatility reversals. However, this does not mean the all-clear has sounded.

Key data points reinforce this:
- The VIX remains above its long-term average of 20, signaling elevated uncertainty.
- The S&P 500’s 8% year-to-date decline (as of April 15) leaves room for further losses if earnings disappoint.
- Tesla’s 37% plunge highlights sector-specific vulnerabilities in growth stocks.

Investors should treat this stabilization as a pause for breath rather than a buy signal. While Bespoke’s historical analysis suggests the worst of the tariff-driven selloff may be over, the path to recovery will depend on corporate resilience, geopolitical developments, and central bank actions. As always, the market’s next move is anyone’s guess—but the immediate panic appears to have passed.