VIX: Volatility Under Control?

With the VIX closing at 50.17 today (only a 5.11% increase), it would seem that the general market mood is not quite as bearish as the price charts would indicate. I brought this up on the call 2 weeks ago and I'm making the same observation today.

Despite hitting new multi-year lows, the volatility index remains at the (now tame) 50 area. This is far away from the 70's and 80's we saw in October and November when the Bank Index as still up at 170 and fell down to 120. Remember, the Bank Index hit an ALL TIME LOW today of 49.02 which is more then a 50% drop from the November time frame when the VIX was hitting 80.

What does this all mean? I don't know.

What it suggests, is that the market has already priced in some of the bank failures and maybe much of the associated economic doom and gloom.

One thing we must remember, is that the stock market operates independently from the general economy. We see it all the time and we must remember that despite the most horrific economic news coming out day after day, the market can still put in a sustained bull rally that runs contrary to any logical reasoning. That's why it's more important then ever to watch our charts closely.

VIX: CBOE Volatility Index Weekly Chart: