In the past 20 years, there have been two long periods where $VIX was mainly below 20. During both of these periods, 5% corrections were few and far between. The chart below shows only changes in direction of >5%. Some observations:
- Uncorrected uptrends during these times can last 4-12 months. 1995 went a full year. There are several lasting more than a full quarter. Low volatility has meant higher prices, long bull runs and shallow corrections.
- The two periods ran from 1993-97 and 2003-07. A third period may be starting now, in 2013. Is this a 10-year cycle, lasting 4 years?
- 1993 and 2003 came after economic recessions that corrected the market. We are now already in the 4th year of an uptrend. The starting point for this third era is very different.
