Limits of fear

We're at an interesting inflection point in the markets, and there are some signs we've seen the short term limit of fear, but it's not completely clear.

Today's CBOE put call ratio is near the highest level in the last two years.  Given the higher trough in September, perhaps it can move even higher?

The VIX is at a level that's been a resistance zone since the spring..

Utilities RS has reached short term resistance as the XLU itself has broken a falling wedge.

Also Consumer Staple RS is approaching resistance quickly.  We've noted the false breakdown  below the February lows earlier this fall and it appears to be a key tell.

This is all happening while the S&P 500 ETF is testing the 100 day moving average, which happens to be the area where buyers have stepped in EVERY time since Obama has been re-elected.

While we could bounce immediately, there is an open measured move in the S&P futures roughly .5%  lower.  Maybe that needs hit first?

However, what's interesting is 6/7 times we've dipped near this level(and 8/9 dips overall), the VIX futures have slightly backwardated.  We're not close to that yet.  So while this is a good area for a bounce, the market isn't all that fearful.  

It appears there is another round of selling in the cards, but who knows what level that will come from.   

One positive we could point to is the continued bounce in high yield bonds.   However, what's the point in being that excited about that?  The HYG/TLT ratio has hit new lows with equities.

We are set up to bounce near term, but it's impossible to know how this thing is going to play out. It's best to be prepared for everything.

Trade 'em well!