One interesting note that I’d like to put out there on the VIX right now and that is the tendency for stocks to stay relatively bullish until the VIX drops below 10.

Until that happens, the market continues its uptrend. But if you look at every sell-off in equities over the past five months, you’ll notice that there wasn’t any legitimate sell-off that took place before the VIX crossed below 10. 

Don’t get that confused with the fact that the market can’t sell-off with the VIX above 10, because that has happened too, and happened a few times in August. But the start of a larger sell-off doesn’t happen until the VIX crosses below 10. 

Essentially everyone buys the dip as long as the VIX stays above 10. Once below, it becomes “risk-off” for the market. 

See for yourself in the chart below: 

vix below 10 chart

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