The small caps led the market lower today. Oil lost more ground and energy stocks really got hit. However, bullish signs are signalling. First, the TRIN traded above 2 from 8:45 AM on. This should be significant enough for a one day rally tomorrow. Second, the SKEW actually fell today to below 120. This is a huge divergence from what we saw for the entire trading year so far. This bodes well for the market finding a bottom in the near term, as long as the SKEW does not get above 130 again.
Volatility Indexes jumped along with bond prices. The short term volatility indexes rose a bit above the longer term indexes, but not to extreme levels by any means.
After the market closed, the futures fell further, but are currently regaining ground to close out the loss. We may see some follow through from today's pullback in the morning, but this pullback looks to only be temporary.
With VIX above 20 and less than 3 weeks to February expiration, bull puts look like a good trade going forward if the market shows further signs of bullishness after this sell off.
