VIX, the CBOE S&P 500 Volatility Index, also known as the “fear index,” climbed on worries over the fiscal cliff.

The volatility index climbed for the week ending November 30th but remains below historical long term averages.  While the index climbed, long ETNs declined as futures contracts declined due to complacency in the markets and contango in futures contracts pricing.

Volatility Index – Index: 15.8, +4.8% 

iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX): -1.3%, This ETN is designed to track volatility in the markets as measured by the Chicago Board Options Exchange Market Volatility Index (CBOE Index), a popular measure of the implied volatility of S&P 500 index options.

VelocityShares Daily 2X VIX Short-Term ETN (NYSEARCA:TVIX): -8.4%, This ETN is designed to track 2X return on volatility in the markets as measured by the S&P 500 VIX Short-Term Futures Index.

chart courtesy of StockCharts.com

In the chart above, we can see how RSI and momentum  now point higher, indicating higher volatility ahead, while significant support rests at the 15 level.  The index is still below both its 50 and 200 day moving averages and needs to clear those before it can start a decisive uptrend.

15 is near historic lows and since VIX tends to be a mean reversion index, the most likely move going forward would be higher and that would indicate lower equity prices as the “fear” index tends to move inversely to equities.

Bottom Line: VIX remains near historic lows as complacency prevails in equity markets in spite of significant headwinds like the fiscal cliff and a slowing economy.  As the old saying goes for equities, “when VIX is low, look out below.”

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About John Nyaradi (http://www.wallstreetsectorselector.com) John Nyaradi is Publisher of Wall Street Sector Selector: Your Home For ETF Investing! John writes a weekly guest column, John Nyaradi’s ETF Edge for MarketWatch.com and his investment articles have appeared in many online publications including Trading Markets, Money Show, Yahoo Finance, Investors Insight, Fidelity, ETF Daily News, iStock Analyst , among many others. His book, Super Sectors: How to Outsmart the Market Using Sector Rotation and ETFs, is published by John Wiley and Sons and included among the Years Top Investment Books in the 2011 Stock Trader’s Almanac.