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Latest Volatility Spike Means What?

|Includes: ProShares VIX Short-Term Futures ETF (VIXY)

VIX once again rose sharply higher and stock prices plunged from record levels. Is this a sign that the market will now head lower?

Rising interest rates and a renewed concern about inflation amid stronger commodity prices and rising wages may be what set off the burst of selling.

The S&P 500 Index just dropped from a intraday high of 2872 to a current reading of 2633, a drop of 8% in just seven trading days.

Since Thursday's close at 2820 on the S&P 500 index the market has plunged to below 2600 at one point - a drop of 8% in just three trading days.

The volatility index VIX has gone from a low level around 12 to as high as 50 

in February 2017. See One Year Chart below:

VIX 1 Year Chart

Stock prices have dropped since the volatility index (VIX) hit 50 in early February 2018. That could be the end of the current advance in stock prices signally a new bear market or at least a correction in future stock prices. Several ETFs "betting on low volatility" were effectively wiped out. That reminds me of the beginning of the financial meltdown of 2008. That was ten years ago. 

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.