Most storms invade quiet skies, but not every calm spell directly leads to a storm. This is true in markets as in weather, which makes it tricky to interpret the subdued behavior of stocks so far this spring.
Volatility has ebbed dramatically over the past two months — both the actual day-to-day movement of the market and the expected jumpiness over the next month that's priced into index options, as measured by the CBOE's S&P 500 Volatility Index (VIX).
The VIX has been plumbing 10-month lows, sliding below 14 on Tuesday for the 13th time in the past 20 trading days, after spending most of January and February above the long-term average of about 20. In general, the VIX rises as the S&P 500 index falls and anxiety builds, and drops when stocks rally and nerves are soothed.
The "low" level of the VIX draws predictable cries that investors are "complacent" and the market vulnerable to a serious drop. But the VIX has declined for legitimate reasons. It's not all that low and even prolonged stretches of suppressed volatility don't necessarily lead to quick tumbles.