As long as SPX keeps moving within a 1 Standard Deviation from Open to Close (30-40 points), the VIX will have difficulty rising, allowing for a grind up to resistance areas with high open interest.
Today we had some outside factors impacting the VIX, namely the fact that in the US premarket and EU/Asian hours there was quite a bit of selling which does impact the VIX value, so that’s why we had the gap up. We had not seen that in the last two weeks, there was almost no buying or selling of the futures in the overnight markets. So, now if the SPX doesn’t have some aggressive downward move then we are going to continue to see compressed volatility. And we will just grind higher with low real money” backing, because of a lot of these moves are based on contracts and now ownership.
Right now we have almost no realized volatility in equities, but we have a massive amount of volatility in bonds, fx, commodities, etc. Eventually that will need to even out.