The stock market's volatility indicator is signaling a trough in the S&P 500

• The stock market's volatility gauge is signaling a trough in the S&P 500.
• Futures for the CBOE Volatility Index indicated more uncertainty about the near term than longer term.
• Such backwardation is typically associated with low points in the stock market.

The CBOE Volatility Index is one of the market's favorite fear gauges, and it's flashing an unusual sign that may indicate a low point in stocks.

Futures contracts tied to the volatility index, also known as the VIX, track the expected amount of market volatility down the line.