The CBOE Volatility Index, or VIX , hit a 19 month low this morning. The index, which shows the markets expectations for volatility in the next 30 days, hit an intraday low of 18.39 this morning and has not closed below this level since May 30, 2008.
Also called the "Investor Fear Gauge", the index serves as a barometer of market sentiment. A value above 30 typically indicates a period of high volatility and investor uncertainty while a value less than 20 suggests a more calm period ahead. The chart below shows the inverse relationship the S&P 500 has had over the past two years with the VIX. When the VIX spiked, the markets came down. As the VIX has come down, the S&P has rallied.