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Why there's nothing to fear in the 'Fear Index'

The CBOE Volatility Index—commonly called "the fear index"—has resembled an EKG meter in the past couple of sessions as the market gyrated from fear to greed, seeing consecutive moves of 200-plus points in the Dow Jones industrial average in the last two sessions.

Many on Wall Street call the VIX "the fear index" because it is an estimate of expected volatility in the S&P 500 over the next 30 days. Thus, the higher the VIX, the bigger the expected swing in stocks, though, the market usually worries those moves will be to the downside. That's why a higher VIX means investors are likely more worried about the future.

Yet one multibillion-dollar portfolio advisor isn't too concerned about the elevated VIX levels.

"I don't use the VIX as the leading indicator," said Erin Gibbs, equity chief investment officer at S&P Capital IQ Equity Research. "It is telling us where we are, not where we're going."

(Watch: In battle over the market, the shorts are winning)

Gibbs, who has more than $13 billion in assets under advisory, is instead focused on upcoming third-quarter financial releases by companies in the S&P 500. "We're looking for 6.7 percent earnings growth and 4 percent revenue growth," she said. "So I'm not expecting any major pullbacks/corrections right now within the S&P 500."

Like Gibbs, Richard Ross, global technical strategist at Auerbach Grayson, also doesn't think the VIX does a good job as a predictor.

"These two are really coincident indicators, which means moves down in stocks tend to coincide with moves higher in the VIX," said Ross, a "Talking Numbers" contributor.

Though he doesn't see the VIX as a leading indicator, Ross still believes some meaning can be gleaned from its charts.

The VIX just failed to break its 200-day moving average near 17.50 and that could be significant. "A weekly close above that level would suggest that equities have further to go on the downside and volatility further to go on the upside," he said.

Ross also is keeping an eye on an even higher level for the VIX. "If we were to get above 21.50 on the VIX, it would coincide with a low-teens [percent] type correction in the S&P 500," he said. "We haven't seen that type of move in just about three years."

So, while Ross may not believe the VIX predicts the future, "It doesn't mean it's meaningless," he said. "But I think there are much bigger things to keep an eye on if you're trying to get a little tell into the equity markets."

To see the full discussion on the VIX, with Gibbs on the fundamentals and Ross on the technicals, watch the above video.

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