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The VIX Hits 9, So What?

Uncategorized May 03, 2017
Arun S. Chopra CFA CMT
May 2017
  • The VIX traded below 10 this week.
  • Many have used this as evidence of an impending top.
  • Historical data shows two past examples, with entirely different outcomes.

With the Vix hitting 9 there's been a lot of charts showing this reduced level of activity, most centering around the idea of this being a massively bearish event. While there is no debate that low volatility readings indicate a reduced level of fear and complacent behavior, this needs to be put in context. I have already written a few articles here focusing on what I will be watching in this overall bull market to help guide any longer term topping process. Today's piece is simply to put this weeks '9' reading in context. Breaking a round figure like 10 sounds great, but lets look back at the last two instances. You can see below it's entirely inconclusive.

Chart 1: SPX with VIX 1986-2017

But let's take a look under the hood of each to see if we can get any further info (spoiler...

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