📌 U.S. stock market fear is mounting, but volatility cannot confirm a bottom
U.S. risk sentiment has clearly weakened: the CNN Fear & Greed Index has fallen to a six-month low of 17, entering the extreme fear zone; the VIX rose 30% in a single day, breaking above 20, while the VXN, which measures expected Nasdaq volatility, rose 20% to 28. Multiple indicators are rising simultaneously, showing that investors are more sensitive to short-term risks, but this alone cannot determine how long the sell-off will continue.
Historical readings of fear do not have a single meaning. Over the past two years, the Fear & Greed Index fell to single digits three times, respectively alongside the Iran war; the U.S. government shutdown and the end of balance-sheet reduction, compounded by concerns about capital expenditures; and the impact of the tariff trade war. These cases show that similarly low readings can occur in different contexts, and the index alone cannot establish that the market has bottomed.
Volatility thresholds are not directional signals either. A related post noted that after the VIX broke above 20 in the past, it quickly fell back at the semiconductor downturn bottom in late July. This only shows that the VIX may decline; it does not prove that every break above 20 marks a bottom. The more prudent assessment for now is that risk sentiment is deteriorating; the subsequent trend remains to be validated by market performance. The related data comes from social media posts and does not provide a complete historical sample, so it should be treated with caution.
▌ Sources