35 Years of Market Tops: How VIX Behaves Over Time

From dot-com to today: What 676 market highs reveal

Over the long term, 8% of trading days have seen the market hit a new high, with the median VIX consistently about four points lower than on regular days.
The super-strong market over the past decade has maintained this pattern with frequent new highs during two distinct periods: 1990-2000 and 2014-present.
Since 2014, the median VIX during market highs has compressed to 12.8, lower than the 30-year median of 13.4.

The market continues to climb, reaching all-time highs multiple times since the 2024 election and extending our decade-long bull run. The VIX is currently trading near 16, lower than the long-term average and median of 20 and 18, respectively, since 1990.

To understand this relationship better, we analyzed SPX and VIX data from the past 35 years, starting from 1990. Our analysis revealed two distinct decades with significant occurrences of market highs: The dot-com era from 1990 to 2000, and the current period from 2014 to now.

The past decade has been one of the strongest bull markets ever, with the market consistently reaching new highs except during three notable periods: the 2021-2022 correction, the beginning of COVID in 2020, and the 2016 presidential election uncertainty.

Our historical analysis shows that over the past 30 years, 8% of trading days have seen the SPX at all-time highs. During these periods, the median VIX was 13.4 — remarkably close to the post-2024 election low. The VIX trading range during market highs is notably tighter, averaging about four points lower than typical days.

Focusing on the more recent period since 2014 provides additional insight. The percentage of days hitting all-time highs remains consistent at 8%, and the median VIX difference maintains the same fouir-point pattern. However, one notable change is that the median VIX during market highs has compressed further to 12.8, even as overall market volatility has been elevated since COVID.

This rally demonstrates three critical characteristics. First, it has been remarkably smooth with only minor interruptions. Second, the normalization of the VIX suggests genuine restoration of confidence instead of just temporary relief. Finally, while this rally remains smaller than historical averages, it hasn't finished yet — a crucial consideration for traders planning positions and timing decisions.

Kai Zeng, director of the research team and head of Chinese content at tastylive, has 20 years of experience in markets and derivatives trading. He cohosts several live shows, including From Theory to Practice and Building Blocks. @kai_zeng1

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35 Years of Market Tops: How VIX Behaves Over Time

From dot-com to today: What 676 market highs reveal

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