U.S. investors may be venturing into the land of overconfidence.
The CBOE Volatility Index (VIX), Wall Street so-called fear gauge, hit its lowest level since February 2007 on Monday, hitting a session low of 9.90. This happened even after President Donald Trump told Bloomberg News he was "looking at" breaking up the big banks, which set off a brief bout of volatility in the stock market.
The index managed to close just above 10 and is trading safely above it Wednesday. Closing below that level could be a warning sign for the stock market, if history is any guide.
The VIX has closed below 10 just nine times since 1990 and each of those instances was followed by lackluster 12-month price returns on the S&P 500 index, according to Nicholas Colas, chief market strategist at Convergex.
Colas groups the nine instances into three periods. Check out the chart below: