In the chart below, I continue my practice of displaying the inverted VIX in a weekly chart and looking at longer term patterns. A lot has changed on the volatility front in 5 ½ months, as evidenced by the fact that the current inverted VIX is farther above its 50 week moving average than it has been at any time since the record 64% one day spike in the VIX on February 27, 2007.
Perhaps even more interesting is that in this five year lookback period covered by the chart, current VIX levels look positively middling and unremarkable on an absolute basis, even though the VIX has come a long way in a short time on a relative basis. A new VIX floor in the 15-16 range is not unreasonable. It is higher than the new VIX floor of 13-15 I was calling for on August 1, 2007, but given all that has transpired in the markets over the past ten months, the fact that these numbers are even in the same ballpark is something to ponder.
[For more on why it is sometimes useful to turn charts upside down while analyzing them, readers may wish to check out A Different Way to Look at the VIX: 1999-2007.]