One gauge sometimes used to measure fear is the VIX. While the S&P 500 dropped sharply on Friday and closed below its lower Bollinger Band, the VIX barely nudged higher, closing less than 5% above its 10-day moving average. Below I examine other times this has happened:

Negative results on a fairly low number of trades. Interesting was the fact that most of the winners occurred in the early ‘90’s. The table below shows the results of the above test from 1993 – present.

The number of trades here is quite low, so it’s dangerous to read too much into it, but the implication appears to be negative. While the market is oversold, the Capitulative Breadth Indicator is back to 5, and a sharp bounce could ensue at any time, we may need to see a little more fear before it happens.