About two months ago, several readers asked me if I thought the markets could continue to make new highs while the VIX hovered significantly above its all-time low. My answer then, an enthusiastic “Absolutely!” has not wavered. In the interim, I have even managed to accumulate two additional months of data to support my case.
“The ratcheting up of the low end of the CBOE Market Volatility range from single digits to the floor in the 12-12.50 zone that has prevailed since March is, in my opinion, a major positive for the sustainability of this bull market.The fact that premium sellers are demanding more for assuming risk is a direct refutation of the "complacency" argument those looking to call a top are so fond of trotting out. And to the extent there is less premium selling activity, the "speed bumps" that are created at strikes with large open interest that can often slow rallies to a crawl are mitigated.”