What is VIX telling us?

A quick (admittedly non-scientific) comparison of VIX and SPX since 1990 suggests that, in major market declines, SPX typically bottoms once VIX reaches about 32-35. However, in the most severe market declines (1998, 2001, 2002), the decline did not happen until VIX spiked over 40. As I type this, VIX is about 28. This is well above its level one month ago, but still well below the levels typically seen at a market bottom. From this perspective, it is not surprising that today's early rally was not sustained. VIX says there is still more downside to come. And if this is a severe market decline -- which, given the economic circumstances, it may be -- the additional downside may be considerable.