Bespoke Investment Group just published a chart that shows how the volatility index (VIX), aka the “fear index,” rallied right before the Fiscal Cliff then plummeted right after.
Currently, the index is at its lowest level since June 2007.
“If there’s a line in the sand for the VIX, it looks to be right around 10,” they write. “While the VIX has dipped below 10 briefly in the past, it hasn’t stayed there for long.”
However, the chart also shows that whenever the VIX reaches a periodic low, it tends to spike upwards shortly thereafter.
We’ll keep you posted if the effects of debt ceiling negotiations begin to show up in the VIX.