VIX Has Remained Undervalued For Longer Than Expected.

VIX has remained surprisingly undervalued despite negative economic reports and not so strong earnings announcements thus far.  I understand that since beginning of June, the market has been rallying.  As long as this rising trend continues (as shown in blue lines), I would expect VIX to be subdued.  However, I was surprised that VIX didn't even touch the 20 level when SPY tested the 133 level back on July 12th.

On Friday, Spain reared its ugly head again and negative headlines are popping up about Greece AGAIN in overnight session.  Depending on AAPL earnings results and ongoing developments in Europe, I would not be surprised if SPY tests its support line again (around 134.5 level this time), but this time with higher probability of the support failing due to the fact that SPY and the VIX have priced in potentially positive news and shrugging off actually negative news.  Yes, I know this can be considered a bullish sign, but that was the case over a month ago, when expectations were really negative but price action quite positive.  That is no longer the case.