Investors should practice caution, despite Wall Street’s big rally on Tuesday, CNBC’s Jim Cramer warned.
The market is trekking through a volatile period and Mark Sebastian, who the “Mad Money” host called “VIX master,” is urging vigilance. The VIX, or CBOE Volatility Index, gauges market risk based on investor sentiment about stocks listed on the S&P 500.
Cramer took a look at analysis from Sebastian to get a read on the state of the market.
“While he’s not predicting a big decline, he thinks you should be prepare for choppy waters and perhaps a modest pullback,” Cramer said. “The averages haven’t really digested these latest gains, and like we saw last week, big moves higher can result in some serious stock market reflux.”
The VIX, dubbed the “fear gauge,” and S&P 500 indexes typically run in opposite directions, Cramer explained. When they mirror one another, it tends to serve as a warning sign.
After a string of tumultuous trading days, the major U.S. averages rallied on Tuesday…