Wall Street's Volatility Index (VIX) Has Done This 21 Times in the Last 35 Years -- and It Has a Perfect Track Record of Forecasting Future Stock Moves

Although stocks have been the top-performing asset class over the last century, based on average annual return, this doesn't mean the stock market moves from Point A to B in a straight line -- and the last seven weeks is evidence to this fact.

Since the S&P 500 (SNPINDEX: ^GSPC) reached its all-time closing high on Feb. 19, the ageless Dow Jones Industrial Average (DJINDICES: ^DJI), benchmark S&P 500, and growth-centric Nasdaq Composite (NASDAQINDEX: ^IXIC) have plunged by 15.6%, 18.9%, and 23.9%, respectively, through April 8. Both the Dow and S&P 500 are firmly in correction territory, with the Nasdaq mired in its first bear market since 2022.

When emotions rule the roost on Wall Street, investors often look to historical events and correlative data points for clues as to where the bottom might be, or which direction stocks will head next. Though there isn't a one-size-fits-all indicator that can predict the future with any concrete guarantee, there are a very small number of metrics and events that have strongly correlated with directional moves (higher or lower) in the Dow Jones, S&P 500, and Nasdaq Composite throughout history.

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