The Cboe Volatility Index, also known as Wall Street’s “fear gauge,” ended below 20 on Friday to print the lowest daily close since the March 2020 crash.
The drop below 20 could pave the way for more upside in stocks, Fundstrat’s Tom Lee said in a note on Friday, according to Bloomberg.
Systematic and quantitative investment funds would likely take note of the risk-on signaled by the VIX’s drop below 20 and increase their exposure to equities, Lee explained.
The VIX surged to above 35 in the last week of January as a group of Reddit-based traders bought out-of-favor stocks such as GameStop, causing a short-squeeze and inflicting heavy losses on hedge funds.
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