Kyle Rosen, founder and President of Rosen Capital Management, argues that it is incorrect to assume that because the VIX isn’t higher, we cannot be at or near a bottom of this latest multi-week selloff. He presents his reasoning here – 
Misreading the VIX
By Kyle Rosen at Barron’s Online.
Excerpt: "Don’t believe the popular notion that the market has further to fall simply because a popular measure of market fear hasn’t reached a crisis point.
ACCORDING TO A RECENT article in the Los Angeles Times, "Investors may be worried about the latest slump in stock prices, but they may not be worried enough. A key measure of Wall Street’s fear level about the market — the so-called VIX index — isn’t signaling a high degree of concern at the moment. . . an indication that the market is more likely to keep falling than to rebound in the short run."
This view that the VIX — the nickname for Chicago Board Options Exchange’s volatility index, a popular measure of the implied volatility of Standard and Poor’s 500 index options — is currently reflecting widespread complacency among stock investors has become commonplace…
Well, let’s take a look at the data. Over the past 100 years, realized volatility (i.e. standard deviation) of the S&P 500 has averaged 15%. Meanwhile, implied volatility — or the market price — of S&P 500 options has averaged approximately 20% since index options began trading more than 25 years ago. Historically then, implied volatility has traded at a 33% premium to realized volatility. Why is this so? And if 15% is "fair value," why are so many market observers proclaiming that 25-26% is too cheap?
Moreover, why are they suggesting that this level of VIX is forecasting additional weakness over the short-term?…
Those who were overleveraged or overexposed to stocks have spent the last several months reducing their long positions. Indeed, this is confirmed by the latest readings from both Investors Intelligence and the ISI Hedge Fund survey, which show bearishness, and hence defensiveness, approaching historical extremes. If investors are in fact less invested than they were, they don’t require as much insurance as they did during previous market declines, and this could explain why the VIX hasn’t reached the relatively high levels of January and March."
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