The CBOE Volatility Index – often called the “VIX,” dropped to its lowest level since December 1993 this week. Just after the Fed’s July policy meeting, the VIX dropped to 8.84, its lowest reading since the index started posting real-time data.

The VIX is a computed index of volatility for the next 30 days. It’s not computed based on stock prices; but instead, it’s computed based on options prices on the S&P 500 index. When someone trades the VIX, they are investing in or against market volatility. One site says, “it is just a general assumption based on the premiums investors are willing to pay for the right to buy or sell stock.[1]”

The economy is currently seeing historical VIX numbers. The so-called fear index has only closed below the 10 level on 24 trading days in history, with 15 of those days occurring in the last three months.

Market volatility isn’t necessarily a sign of market growth, nor is a great amount of fear a sign of market decline. The last time the VIX saw a prolonged period below 10, in November 2006, the S&P 500 rallied 10 percent six months later, and 5 percent one year later[2].

[1] https://seekingalpha.com/article/1233251-vix-what-is-it-what-does-it-mean-and-how-to-use-it

[2] http://www.cnbc.com/2017/07/25/heres-what-happened-the-last-time-the-vix-traded-this-low.html