The CBOE Vix index, the equity market volatility gauge that is often called Wall Street's "fear index", has more than doubled in the past two trading sessions as equity markets sell off sharply.
The Vix jumped 116% on Monday - its largest rise on record - as the Dow Jones Industrial Average fell 4.6% - the stock index's biggest fall in percentage terms since August 2011.
That rise took the index to a close of 37.32 on Monday, its highest level since 24 August 2015, which was the last time the Dow fell by 1,000 in a day during the flash crash.
Heavy equity sell-off
Thanks to its use as hedge against equity market turbulence, the Vix most often reflects periods of heavy selling on the US S&P 500 index.
In recent months it has mirrored some exceptionally tranquil periods on US equity markets and hit an all time low of 8.56 as recently as 4 January.
"Equity markets have finally woken-up after a period of low volatility and complacency that had led to rapid gains," said James Knightley, chief international economist at ING.
At its current level, the Vix now reflects expectations that the equity market is undergoing a much-anticipated correction - a fall of at least 10% from its most recent cyclical high.
Corrections are normal, healthy functions of the stock market. When earnings growth expectations fail to keep pace with equity valuations investors periodically reduce their portfolio allocations to stocks and raise their exposure to safer bond markets.
They'll maintain these positions until equity valuations come down to more realistic levels, then buy back into the stock markets. Corrections occur about once a year on average. The S&P last corrected in January 2016.
The Vix index should reflect this in the coming days. Corrections, when a function of a healthy market, don't tend to last long, and there are strong economic underpinnings with robust growth in the US and eurozone.
"The party may be over for now but this could be more of a sobering correction than a rout," said Jacob Deppe, head of trading at Infinox.
“There have been plenty of warnings over the past few weeks that equities were overvalued and that US stock markets in particular were overheating.
He concluded: "While the fall in global equity markets looks dramatic, it is no more dramatic than the record rises we have seen since the end of November. For that reason alone many would argue a correction was on the cards."
As markets in Asia and Europe responded on Tuesday to the heavy losses seen on Wall Street overnight, the Vix pushed higher.
The "fear index" rose a further 7% to 39.94.