The VIX has been called the fear index.  That is, it is a measure of the uncertainty and risk that investors see over the near future (specifically, the next 30 days).  Constructed from options on S&P500 index futures, the VIX is technically a gauge of what is called implied volatility. (For a definition, see the brief note at the end of this post.)

The technicalities are not all that important, as the VIX and similar options-based measures of implied volatility (like the DJIA Volatility Index shown with the VIX in the chart below) track financial conditions pretty well. When implied volatility is low, conditions are relatively accommodative; when it is high, they are restrictive.  Today, volatility is unusually low...