It’s not every day that you see the Cboe Volatility Index — market’s ‘fear gauge’ — spike above 25, much less 65. When it does, it suggests fears are running exceptionally high based on real-time pricing of S & P 500 Index options. The ‘VIX’ touched 65 briefly before retreating in Monday trading. Often, spikes in the VIX are harrowing for investors because it means that the inversely correlated S & P 500 is trading off, in this case as much as 4.2% intraday. A spike in the VIX of this magnitude has not occurred since 2020, when the COVID-19 related decline in the S & P 500 was maturing. That was when the market was amid a high-volatility regime. We believe another high-volatility regime is upon us, with the prolonged low-volatility regime that preceded it coming to an abrupt halt. This is not necessarily a bearish long-term indication for the S & P 500, but it does tell us to expect more pullbacks and corrections as the uptrend becomes more gradual. In May, we introduced to clients and our X followers the possibility of a high-volatility regime, and you can see from the monthly VIX chart that, thankfully, they tend to be shorter than low-volatility regimes. Having enjoyed one of the latter since December 2022, or the end of the 2022 bear market cycle, it should not be too surprising to expect at least a temporary break in the cycle. The new monthly MACD crossover suggests that the VIX should establish a higher floor for 9 or more months. What does it mean for the market? What does this all mean for the S & P 500? Because elevated volatility tends to be associated with an emotionally fraught tape, we can assume that the S & P 500 will see more pullbacks, if not corrections (10%+), and that the steep uptrend will take a more gradual slope. The only indication we have of this is the current pullback, and a counter-trend indication on the monthly S & P chart from the DeMARK Indicators supporting four months of consolidation. If our long-term trend following measures were to deteriorate behind the S & P 500, we would be more inclined to reduce exposure. Otherwise, we generally recommend staying with core long positions, reducing more opportunistic/high-beta exposure. A rebound in the S & P 500 (i.e., a VIX pullback) can be used to hedge partial exposure from a top-down perspective. —Katie Stockton with Will Tamplin Access research from Fairlead Strategies for free here . DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . 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