Again, the VIX is Warning of Complacency

The VIX plunged to a low of 12.52 yesterday, which was its low for the decline off of the Aug 30 high at 17.80, but still failed to confirm the new high in the SPX.

And yes, it left behind a glaring divergence that should serve as a warning signal that the S&P 500 Index (SPX) is vulnerable to a correction.

Let's also notice that all of the action in the VIX since July has the look of a rounded-bottom formation, while all of the action in the SPX looks like a potential topping formation.

First things first, though.

The VIX has the right look of a price structure that has completed a downleg from 17.80 to 12.52, which if accurate, means that the VIX is in the early stages of a potentially potent rally effort.

First resistance is at 14.50/70.