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Are we at a bottom? Two sentiment indicators are at extremes

Where is the market bottom? I have no idea, but there are a couple wacky readings among two popular indicators that indicate fear is at a fairly extreme level.

First, I've said many times that I don't pay much attention to the CBOE Volatility Index until it gets over 20.

It's over 20.

But more importantly, it has jumped over 20 fast. Really fast. It was 13 on Tuesday. It hit 24 today.

When the VIX moves from 13 to 24 in a week, you are forcing traders to reposition their portfolios. They have been assuming a certain amount of volatility, but when it goes through the roof in a few days they now have to assume that stocks will be trading outside of ranges they had taken for granted a few days ago.

"The fear is that could give back 18 months of gains in five days," one options trader told me this morning.

The options pits at the NYSE MKT (formerly the AmEx) were as busy as I have seen them in a year. This is an options expiration day, and with the S&P 500 sitting right on the pivotal 2,000 level, there was a lot of activity on either side of that level.

The VIX has been up more than 10 percent three days in a row, which is a rare occurrence.

This is such an unusual move that we may be approaching some kind of at least-short bottom.

According to our partners at Kensho, this has only happened twice in 21 years: In March 1994 and October 2014.

That's not much data to go on, but the trend has been positive. One week after the event in March 1994, the S&P 500 was up 0.3 percent; one week after the event in October 2014, it was up 1.6 percent.

One month after, the trends were also positive, with the S&P up in the month after March 1994 and 8.7 percent in the month after October 2014.

At least the trend is positive on all four accounts.

Another sign of extreme fear: the CBOE Equity Put/Call ratio hit 2.0 this morning, another very rare occurrence (it has since come off a bit). The ratio, which measure the number of puts versus calls on the CBOE, is usually below 1.0. A reading of 2.0 and above is extreme, a sign that investors are willing to buy protection at any price.

  • Bob Pisani

    A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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