Yes folks, the VIX has crossed below 18 and can no longer vote. Next stop, the Miley Cyrus-Roger Clemens “friend” zone.

Jason Goepfert of Sentimentrader had this observation on Minyanville yesterday.

I checked for any other time since 1990 that the VIX hit a six-month low, while the S&P 500, on which the VIX is based, was still at least 1% below its own three-month high. That would show us times when traders were assuming a low-volatility environment despite prices that might not justify that assumption.

Returns in in the S&P 500 going forward were substandard (and negative) going out as far as two month’s. From one to ten days out, the S&P was positive less than 45% of the time, and showed an average return that that varied between -0.1% and -0.8%. Not a huge negative edge, but certainly less than random.

…..In the last bear market there were two pockets of concentrated readings like this, and both led to very poor performance going forward, which is no surprise. Those were in early and late June 2001, and again in mid-March 2002.

Kind of jibes with my own opinion that we sit in a similar stage of the market as we did in the spring of 2001. Just substitute tech for financial. They proclaimed the coast pretty clear. Stocks churned up, but below the downtrending 200 Day MA. And volatility tanked. Sound familiar?

Now in all fairness, option volatility has no reason to lift right now. Stocks themselves remain range bound and move within those ranges at the pace of a snail. But that in an of itself suggests complacency too.