10 day realized volatility in the SPX - average daily move in the SPX for 10 days expressed in units of one standard deviation - "realized vol":
Since most of the pressure and drama since August has been on the downside, the volatility realized tracks the market to a great degree. This along with some technical consideration of the correlation of the stock moves making up the SPX, is the reason most folks look at high volatility as a sign of a bear market - and that usually is the case in the short volatility measures.
And since the SPX is the the broad market index most closely aligned with the USA GDP waxing and waning - or rather the "gap" that current growth realized in excess or less than the growth than the GDP can reach without starting inflationary pressure - it is reasonable to look at volatility as the "canary in the coal mine" in regards to how GDP is doing.
Market makers and position takers on the option markets seldom take a view on options in terms of the direction of the SPX, and carry various hedges to offset their risk. Therefore there is a usual and dependable relationship between the above "realized volatility" above and the "implicit volatility" that, as named, is implicit in the option price. Further more their is a relationship between short term volatility explicit and implicit and longer periods of volatility which is a function of time - in fact it is the square root of time - which I wont get into here as it is the concept that is the core of much of Einsteins work and allowed Black, Scholes, and Merton to win their Nobel.
But it means we can watch developments in volatility and then reasonably expect it to "expand" or "scale" along time at certain levels and also relate, for SPX, to the economy and between option trading (implicit volatility) and price moves in SPX (explicit or realized volatility).
Volatility also has strong tendencies or is "persistent" such that basic shapes in the movement of volatility can provide a weak prescience of the future. Volatility is therefore the most important market level to watch and understand as it is the only technical trading pattern that will provide a dependable prescient development. (This is the basis of various complex works called ARCH and GARCH).
Basically persistence means that given the above connections, SPX volatility viewed in implicit (forward, ex ante) space as well as realized volatility (ex post) to justify or verify the moves in implicit volatility, and given the all important macro economic considerations that now dominate everything, all will give you a brief head start on trading or at least allow one to control risk in terms of whether or not "is it safe yet".
Past market moves during duress is a good starting point. First look at the 70s with long term realized volatility (120 days) showing a typical pattern which is the basis of "persistence" academic theory:
A core aspect of the persistence characteristics of volatility is that it will, in the end, never describe a multi peaked pattern but will always depict, in the end, a single peak. That means it is very dumb to apply standard technical and trend analysis on volatility. What one does it determine the "regime", the long term riskiness or volatility in the market and then watch for the volatility realized, and implicit to fill in a single peak. The closer one gets to the market in terms of shorter periods of realized volatility considered and in short dated options, the more messy this gets and the less obvious the development of this single peak can be. This is why folks do apply technical analysis to the short dated VIX and live to tell the tail, but they are always at risk for a regime shift or a snap back to the regime due to persistence such that the larger moves will be jumps.
The current pattern of realized 120 day of realized SPX volatility:
If this doesn't give you pause for concern, I don't know what would. As far as volatility in any strategic consideration goes, is like catching a falling knife. Potential for large gains but only a hint of a peak being described.
Option markets are being more constructive in general and there is solid academic literature which provides over time and in longer dated volatility markets, and given all the connectivity noted above, the implicit volatility of the SPX is prescient and will lead realized volatility.
The SPX volatility market at various dates shows this messiness in the short end but longer dated volatility expected perhaps has made a turn:
But, one should keep in mind the long dated realized volatility and relate it to the pattern that did fill out in the 70s. Long dated realized SPX will in the end define a single peak. Market is still on hold and all is bet on the Obama-Biden Plan being sufficient and that Keynesian principles do work.