Since peaking in early October, the CBOE Volatility Index (VIX) has turned a series of lower highs and is possibly poised to put in a new four-month low.

On October 4, the VIX, often called the "fear index," peaked at 46.88 and proceeded to fall to a low of 24.44. This is what is expected as the month of October was one of the 10 best months for the S&P in history on a percentage basis.

What concerns me is that during the pullback that lasted most of November, the VIX barely moved back above the 37.50 level.

On the one hand, you would have expected the VIX to rise sharply in November. On the other hand, the VIX was stuck between 15 and 30 from July 2010 through July 2011. During this period of low volatility, the S&P gained approximately 35 percent.

The question right now is whether the VIX is ready to slip back into a range similar to what we saw during the rally, or is it getting ready to scream higher due to another pullback.

This is something we will want to keep an eye on in the coming weeks.