The CBOE Volatility Index, also known as the VIX, may have a warning for investors. Yahoo Finance's Jared Blikre explains what the VIX's seasonality may reveal about the future for stocks.

Video Transcript

- Well, today's chart of the day, we are looking at the VIX and this is seasonality. So you take an average of what the VIX has done over several decades and you plot them in a one-year chart here. This is what you get.

And what's really interesting-- by the way, if you're wondering where we are, we are here. And this is actually right at the beginning of August. And you can see that this is the beginning of what happens usually is an uptrend in volatility. An uptrend in volatility usually almost always means down stock prices.

And one of the reasons for this is because the average is skewed over the years by a number of September and October market crashes. It doesn't mean that stocks have to go down, but it means every once in a while there's a big crash. And we've seen a number of them occur in this time frame. So we want to keep open to that possibility. Also, we get one of these spikes in January to February.

And I'm just going to show you what the VIX has done so far this year. Pretty interesting because we are, kind of, tracking the same price. We got this big spike up in March not February. So it was a month late. But that had to do with the iBank panic and that was the internet bank panic that we saw that involved all of the regional banks.

So what stands out in this chart is we are all the way back down at the lower right. 14 handle for the VIX is very small. It's a very low number. And you can see, you take a three-year chart you'd have to go back five years to get to the prices or you get to the levels that we're seeing VIX right now.

Now, the VIX is a non trending asset. It's mean reverting. So if it goes up, it tends to come back down. And the biggest thing for the VIX is you can buy protection, but it gets very expensive when you need it. You want to buy it when it's right here when you don't need it.

All right, let's do a final check of the markets. And I'm going to go to our indices, our global map here. It's been a-- it was a mixed day, but you can see everything now in the red.

The Dow down just barely. NASDAQ off about a 1/3 of percent. Small caps, Russell 2000 down about 1%.

And I want to check in on our heat maps here. Let's go to our intraday look. And there we go, we got tech and industrials. Those are the only two sectors in the green.

Rounding out the bottom, we got energy, consumer discretionary-- that's retail-- and utilities. So interesting mix here not going to make too much of the price action.