A new report by Goldman Sachs analyst Krag Gregory looks at the VIX to see what market volatility is saying about the possibility that the United States could soon be entering a recession. Gregory has observed that the VIX is indicating that investors are as uncertain as ever about the near-term fate of the stock market.

Splitting The Difference

Goldman estimates that the baseline VIX level that would indicate that the recent market weakness is nothing more than a short-term bump in the business cycle is about eighteen. On the other hand, the median daily VIX during the past three recessions has been twenty-six.

During the past week, the VIX has averaged about 22, almost exactly splitting the difference between the two scenarios.

Waiting For Data

According to Gregory, the market appears…

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