The CBOE Volatility Index , known on Wall Street as the VIX, helps traders track when a market rally is actually unhealthy, said DataTrek co-founder Nicholas Colas.
Monday's close for the VIX around 15 "is a healthy sign" for the temperature of the market as it advances, Colas wrote to clients.
To put it succinctly: "Rallies built on an elevated VIX signal a bubble," he wrote.
That's a lesson market participants learned, during the dot-com bubble of the mid- to late-1990s, he said.
In the current bull market, dating back to the fourth quarter of 2022, however, the VIX has been largely "well behaved," Colas argued.
Persons:
DataTrek, Nicholas Colas, Donald Trump, —, Monday's, Colas, That's, Jessica Rabe, Trump
Organizations:
Research, U.S