The often overlooked Nasdaq volatility index is interesting today on surprise news.

Like for its better-known cousin, the Vix Volatility Index, ‘The Street’s view of the VXN, is that it measures ‘fear’ in the market and that it would be likely to be a good indicator of whether market participants will adopt a ‘fight’ or ‘flight’ response in reaction to potentially negative stimulus.

And we can note that Apple’s shares are already down about 4% after word yesterday of Steve Jobs’ leave of absence for health reasons, the second within a few years. Also note, the European listing closed down about 8% last night.

What I’m not going to do here is try to second-guess speculation, nor expert medical opinion and look at those health issues and their potential impact on Mr. Job’s ability to remain CEO. That would not be particularly fair nor even necessary.

But with Apple Inc. being amongst the biggest components of the Nasdaq Composite, its effect will of course have a significant weight on the price of the Nasdaq 100 front-month-futures contract and on other Nasdaq-based derivatives, like the CBOE’s Nasdaq Volatility Index [$VXN]

Nasdaq 100 March contract is currently down about 0.3%, having been worse off a little earlier.

VXN index is currently at $17.52. Its prior closing price at $16.49 sits within a visibly historic and solid band of support/resistance on the monthly chart.

The step up above the $20.85 line during May 2008 represented a staging point toward the VXN’s highest level in recent history at 60.30 in October of that year. Relatively strong price action was definitively indicated by the piercing of 26.24 in July 08.

The most recent moves around that level happened in August last year and were capped at 27.45. So given that the index is right now battling the 20-day MA on the three-month chart between 17.5 and 18, there could be scope for a reflex reaction upward right now.

If that transpires, the points between 26.24 and say 27.50 would be crucial to get over first in order for there to be a prospect of the return of significant ‘fear’ in the technology sector.

ThSM