Market Insider

Why this complacent market may not be that bad

A trader stands outside the New York Stock Exchange.
Mario Tama | Getty Images

The market's closely watched "fear index" is at a one-year low, but it may not be heralding the kind of market sell-off it has in the past.

When the CBOE's Volatility Index, or VIX, fell to a low of 11 last summer in a signal of complacency, the market was jolted by China's sudden currency devaluation. That sent the S&P 500 spiraling lower, in a more than 12 percent correction.

"I'm not so sure this August will be a repeat of last year," said Daniel Deming, managing director at KKM Financial. He said one reason is the lack of over-optimism as the S&P 500 has risen this year to record highs, even with political uncertainty. High levels of optimism often indicate a market top.