The VIX spiked nearly 25% in early trading as the SPX hit a fresh November low.
Traders reacted the only way they knew how: they bought the dip!
The SPX hit a low at 2557.45, a level not seen since October 26.
That had the VIX at 14.51, the highest level since August 21.
As you can see in the chart, the VIX seems to be climbing off its record-low 50-day moving average the same way it did in mid-August:
That said, it's too early to tell whether we're seeing a real volatility spike.
The Russell 2000′s relative weakness has been a clear negative.
As you can see here, it looks like it fell out of a possible bull flag in early October:
This morning, it hit a low of 1454.17 to mark a 7-week low.
However, the Russell came well off the lows, and actually showed relative strength with a -0.2% decline vs. -0.4% for the SPX.
The Russell, and the market as a whole, were fueled by better-than-expected economic data, which drove a rebound in the US dollar.
The October core CPI Index rose 1.8%, beating the 1.7% consensus. That's the second strong inflation print in as many days, following yesterday's PPI report.
October retail sales were also better than expected.
The numbers ended the dollar's slide and put US equities on firmer ground.
As you can see in this 10-day 30-minute chart of USD/JPY, the dollar's been sinking like a rock, but it turned around in a jiffy when the numbers hit:
US Treasury yields barely budged on the economic data, but bank stocks still performed fairly well today.
Biotechnology was another bright spot.
The Nasdaq Biotech ETF (IBB) started the day on a negative note, but it popped into the afternoon and finished in the green.
Traders have been concerned about biotech's recent collapse, so this little rebound was a small victory.
We also saw a nice intraday rebound in the iShares High Yield ETF (HYG).
High yield has been pretty weak lately, so this was another positive today.
Taking a look at individual stocks, Target (TGT) fell -9% on its weak holiday season outlook. The company actually reported strong sales, but competition's going to be a beast this holiday season.
Case in point: for weeks, my email inbox has been jam-packed with Black Friday sale emails from Best Buy (BBY):
Not that I'm complaining! The deals are great so I'm happy to get them!
Roku (ROKU), which has been a real rollercoaster of a stock since coming public in September, rebounded from yesterday's big dip off the highs.
Roku peaked at $48.80 yesterday and bottomed at $34.22 today before floating up to $38.
Now, if you're into options, I noticed something interesting.I'm noticing something interesting happening in Roku options.
There is a massive put options skew. This means that implied volatility readings on put options are significantly higher than on call options.
This implies that traders are paying up big time for put options. This is likely because the stock is Hard to Borrow, so those desperate to short have to pay up big for put options.
This adds up to very negative sentiment.
We've seen similar situations in many hot IPO's — Twilio (TWLO), GoPro (GPRO), and Ambarella (AMBA) come to mind. These stocks had a few things in common: very strong earnings, high short interest, and big put skews.
And most importantly, all three had massive runs higher before they flamed out.
The broader markets will likely dictate direction for Roku from here, but I'd think twice before hopping on the short train.
If the SPX firms, ROKU could hit fresh highs.