In late 2006, when volatility put a momentum bottom, SPX was in high 1300s. From late 2006 to late 2007, SPX rallied 200 points to final top along with increasing volatility.
That last 200 points on SPX was still called bull market but it was not a straight up move as there were several sharp intermediate term sell offs along the way.
Since July 2009, where VIX put a momentum bottom, SPX rallied some 150 points. If the basic dynamics of the financial markets did not change, it is doing exactly what it has been doing for centuries: Volatility is strengthening into the final top after which the value of the volatility will explode like its momentum.
This phenomenon about volatility and market pivots can also be observed in smaller time frames. Volatility always tend to increase as the market approaches the final top. The opposite is true for the bottoms. Volatility tend to decrease as the market approaches to the final bottom.
After the correction into the xMas, there may be higher prices on SPX but they will certainly be accompanied by higher VIX values. After we enter the epicenter of the primary C-Wave in 2010, I believe VIX will print all time highs and will no longer drop for months. This is something unseen before because we did not have such move in decades since VIX was created.
