Remember that friend who gets way too confident after a few wins at poker? Yeah, that’s Wall Street right now. The VIX—aka the market’s “fear gauge”—just hit its lowest level since February, and if you’re thinking “cool, smooth sailing ahead,” well… let me tell you what happened last time.
Spoiler alert: February marked the exact top of the post-election rally before everything went sideways faster than a shopping cart with a wonky wheel.
Here’s the thing about the VIX—when it’s super low, it means everyone’s feeling pretty chill about stocks. No one’s buying insurance (aka options) because nobody thinks anything bad could happen. It’s like driving without a seatbelt because the roads look clear. Sure, until they don’t.
And speaking of overconfidence, CNN’s Fear & Greed Index is literally flashing “GREED” right now. Not “optimism” or “bullish sentiment”—straight up GREED. When sentiment indicators start sounding like the seven deadly sins, maybe it’s time to pump the brakes?
But wait, there’s more! (I know, I know, but hear me out)
This week is basically earnings season’s Super Bowl. Microsoft, Apple, Amazon, and Meta—the four horsemen of market cap—are all reporting. Together, these giants make up nearly 40% of the S&P 500. No pressure or anything.
Meanwhile, we’ve got some decent news on the trade front. The U.S. and EU just struck a deal that swaps scary 30% tariffs for more manageable 15% ones, plus the EU is throwing around $750 billion for U.S. energy and infrastructure. China’s also playing nice with a potential 90-day tariff extension.
Sounds great, right? Here’s the catch: good news in an overheated market often becomes a “buy the rumor, sell the news” situation. It’s like when your favorite restaurant gets too popular—suddenly the wait times suck and the food isn’t as good.
The smart money isn’t panicking, but they’re definitely not throwing caution to the wind either. August is historically one of the market’s moodiest months, and we’re about to walk right into it with sentiment running hotter than a Phoenix sidewalk.
Look, I’m not saying the sky is falling. The economy’s still chugging along, earnings could surprise to the upside, and maybe this time really is different (famous last words, but hey). But when the VIX is whispering warnings and everyone else is cranking the music louder, it might be worth listening.
The easy money has probably been made. This isn’t the time to YOLO into meme stocks or chase breakouts. It’s time to be that annoying friend who suggests maybe we should call an Uber instead of driving home ourselves.
September has a way of humbling overconfident markets. Better to be early and wrong than late and broke.