NEW YORK — The VIX, otherwise known as the market’s fear gauge, is firmly back under 30, suggesting that investors are confident the worst is over. But it remains above the 20 mark, a sign that investors are not overly exuberant.

This continued skepticism is helping to fuel gains in the market, as earnings continue to top expectations, some analysts say.

On Thursday, the Chicago Board Options Exchange’s volatility index, known in the market as the VIX, dipped 0.3 percent to 23.39.

A sustained rise in the VIX usually accompanies selling pressure, and the gauge typically spikes when investors panic. The index is made up of the prices of a range of options on the S&P 500 Index that investors buy to hedge their bets.

When these options are more in demand and their prices rise, it normally indicates heightened nervousness.

Last October, the VIX spiked to a record near 80 shortly after Lehman Brothers filed for bankruptcy, roiling global markets. But as stocks began in early March to mount what’s been a huge rally back, the VIX started to fall from levels above 50, breaking below 30 in June.

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“Having broken below 30 is an indication that we’ve busted that fear factor, but we’re not overly exuberant,” said Marc Pado, market strategist at Cantor Fitzgerald. “It’s not apathy. But people are more neutral and accepting that markets won’t stumble any further, while still questioning how far we can go up.”

On Thursday, the Dow Jones industrial average rallied 188 points, or 2.1 percent, to 9,069, with the blue-chip benchmark breaking through the 9,000 level for the first time since January.

The S&P 500 rose 22 points, or 2.3 percent, to 976, while the Nasdaq Composite Index gained 47 points, or 2.5 percent, to 1,973. This marked the 12th session of gains for the technology-heavy index – its longest winning streak since January 1992.

Many contrarian analysts believe that as long as the VIX remains elevated, meaning that some investors are placing negative bets on the market, stocks can continue higher when better news than expected comes along. Since last week, an unabated flow of better-than-expected earnings has frustrated those positions, helping attract the pool of yet-to-be-converted buyers.

“There’s still a lot of skepticism and a ton of cash on the sidelines,” said David Chalupnik, head of equities at First American Funds in Minneapolis. “The VIX should continue to decline with the economy improving and earnings coming out much better than expected.”

“The thing with the VIX,” according to Pado of Cantor Fitzgerald, “is that it’s a moving target. In different markets, the range varies.”

In a bear market, he said, the VIX can trade between 20 and 40, with anything above 40 indicating panic levels. In a bull market, the VIX can trade between 10 to 20, but trading levels above 20 or even above 30 don’t necessarily indicate panic.

The strategist does believe the market is now back in a bullish phase, pointing not only to the 46 percent surge in the S&P 500 since its March lows, but also the 25 percent jump in the Nasdaq for the year to date.

“If you think we’re in a bull market with the VIX at 25 in the middle of the range,” Pado added, “we’re closer to an oversold level than overbought.”


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