The VIX measures the volatility of index option prices listed on the CBOE. Like the put/call ratio, it is a measure of investor sentiment. In the rare cases when the VIX moves above 45, it reflects major angst in the market, indicating an advantageous buying juncture; At times when it drops beneath certain levels, it indicates complacency.
Yesterday, Gary B. Smith ran this graphic on RealMoney, and I agree with his perspective:
The Volatility Index is often called the fear indicator; When investors are nervous, they often hedge their positions through option buying; When they are too complacent, they ignore hedging alternatives.
Click on chart for larger image . . . Source:Stockcharts.com
Look to buy peaks above 50; When the VIX drops below the 18-20 range, it suggests a complacent market due for a reversal.
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.