One of the better tools for determining whether the VIX may be too high or too low is to compare the VIX to recent historical volatility levels in the S&P 500 index. Unlike the VIX, which is measured in calendar days, historical volatility is measured in trading days, so 21 days of historical volatility has about the same time horizon as the 30 days used in VIX calculations.
Instead of 21 day historical volatility, most practitioners seem to have standardized on 20 day historical volatility as the appropriate recent look back period. In order to get a preview of how the 20 day HV is developing, I spend a fair amount of time looking at 10 day historical volatility.
The chart below shows the SPX, the VIX, and 10 day historical volatility in the SPX going back to the beginning of November, just prior to the SPX bottom and the last big VIX spike. Note that since mid-December the VIX has been above the 10 day HV for all but five days, the period stretching from January 28th to February 2nd. With the relatively gentle movement in the SPX over the course of the past few days, the SPX 10 day HV has once again moved dramatically below the VIX, closing at 31.13 yesterday.
Unless volatility picks up dramatically, I would expect to see the VIX start moving in the direction of the SPX 10 day HV, quite possibly returning to the 30s for an extended stay, starting as early as next week.
[source: VIX and More]