The VIX has dropped right back where it was a few weeks ago as the S&P 500 has risen 7 days in a row. Of course the last time the VIX was this low there was a small correction (points A to B).
Meanwhile taking a look at a 20 year chart of the VIX, on a monthly closing basis, notice it's currently at a 20 year low. Furthermore there has been a long term downward channel going all the way back to early 2009. Each time the top of the downward channel has been tested, the VIX has dropped back to the lower part of the channel (points C to D), which has been followed by a surge higher in the S&P 500 (points E to F).
Currently the VIX has dropped back to the bottom of its downward channel. Thus the question is will it reverse and eventually rise back to the top of the channel? Notice the last two times the VIX rallied to the top of its downward channel (points G to H) the S&P 500 dropped back to its upward trend line from the 2009 low (points I to J).
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