As the stock market continues to reach new highs, investors may be wondering if the recent calm in the VIX index, which has not closed above 15 since early August, signals a potential change in market dynamics. While it is difficult to make direct comparisons between trending and mean-reverting assets over time, there is reason to be cautious given the historical relationship between the two.

As the chart below illustrates, when VIX traded at these levels last year, SPX was 250 points lower. This correlation suggests that investors may want to prepare for increased market volatility in the near future.

It is important to note that this relationship is not always linear, and there have been instances where VIX has remained low despite SPX being at high levels. However, history has shown that when VIX trades at these lower levels, it often precedes a period of increased market volatility.

Investors may want to consider diversifying their portfolios in preparation for potential market fluctuations. This could involve adding defensive positions, such as utilities or consumer staples, or hedging against potential losses with options strategies.

While it is impossible to predict with certainty what will happen next, the unusual silence of VIX is certainly worth keeping an eye on in the coming weeks and months. By staying informed and prepared, investors can better navigate the ever-changing landscape of the stock market.