The only signs of the market topping out soon are coming from the fact that the volatility indexes are buried at multi-month lows and the SKEW remains trading near or above 130 for almost a month now.
The VIX is below 11 again, while the 'older' measure of VIX, called VXO, now trades under 10. When the VIX trades below 11 and VXO trades below 10, these are usually good indicators that the market will retreat to levels much below where the market currently trades in the next months. In other words, VIX will rise soon from these levels.
As VIX falls, I bought some VIX 11 calls that expire in two weeks. I paid $1.45 for these, but after today's bullish reversal, they only trade for 85 cents. All the better to add more to the portfolio either tomorrow or later this week.
As this is options expiration week, bullishness is not uncommon. It's what the market does at the end of this month is important.
SPX is currently trading above its 4 standard deviation Bollinger Band based in implied volatility. If SPX closes below the 3 standard deviation BB level, around 2320 currently, this will give a strong sell signal to the market.
