The RVX is a key measure of market expectations for near-term volatility conveyed by the Russell 2000 (RUT) stock index option prices. Just think of it as the "VIX of the small caps."

The candlestick chart below of the RVX also has a 12-day moving average displayed. In addition, there are envelopes that are calculated using a 12% range to the upside and downside. In the short term, the RVX has tended to be mean-reverting, and these envelopes can be a decent tool to use in combination with other technical indicators.

The most interesting thing to me is how the RVX closed beneath its lower envelope for the second consecutive day yesterday. The last time the RVX did this was on Oct. 28, 2011. As you can see on the second chart below, this move was followed by a 12% decline during the following four weeks and we experienced a significant increase in volatility.

Currently, the RUT is also trading just below the former neckline of its head-and-shoulders pattern, and the 25% retracement of its rally from October 2011 to March 2012. One thing to stay aware of is that after the 12% decline last November, the RUT continued its uptrend and ultimately rallied about 25% during the next four months. Given this technical and volatility backdrop, it's going to make the market's reaction to the Fed today even more interesting.