Tame VIX masks small cap volatility, vulnerability

The VIX short term futures are below long term average levels, far below the highs of the last year and a half. Stock market volume levels are relatively healthy but by no means robust. The frightening action is below those radar screens and it's in the small cap market. Volumes are light and the predominent direction is a steady drift down. Unexpected events in the face of complacent traders lead to extreme reactions. NOA, a small west Canadian oil shale producer reported modestly better than expected earning this week and spiked. XIDE, the battery manufacturer, lost a contract with Walmart and completely collapsed. These were both material events but the reactions of the market were extreme. The liquidity is moving to the large caps more decisively now.