There's a key measure of stock market volatility that shows why this month's sell-off has been different than the drop in December. The CBOE Volatility Index, or VIX, is sometimes known as "the fear gauge." The VIX helps measure Wall Street's expectations for large shifts in the stock market in the coming months by looking at prices on S&P 500 options. The VIX is near 18.50 on Friday – close to its 200 day moving average of 16.98. But despite the index falling more than 6% this month, the VIX has hardly budged. It topped out in May at 23.38 – well below the December high of 36.20, a month where the S&P 500 dropped 9.2%.

If this is the fear gauge, why is there not as much fear out there as in December considering there are arguably more things to worry about with a trade fight brewing with not only China, but Mexico now? For one, investors believe strongly that the Federal Reserve will step in and cut rates, possibly multiple times this year, if stocks keep falling. Investors didn't have such comfort in December, a sell-off which came right after a Fed rate hike. Since then, Fed officials have pivoted to a softer, more flexible stance on rates. And now the market predicts, they will more likely than not, cut this year.

Fear still 'lurking'