Wild VIX Volatility A Reflection Of Increasing Market Jitters?

There's no other way to describe the recent action in the stock market: It's just plain ugly. The risk-on trade appears to be over as investors are divesting themselves of higher beta names especially technology and biotech stocks. Exchange-traded funds in these areas include the Internet Portal (PNQI) and Biotech funds, IBB & FBT. All of these closed below recent support levels today.

The most interesting facet of today's market was the action in the Volatility Index (VIX). Trading was extremely jittery (for lack of a better word) and action was punctuated by severe momentary spikes on the order of 20-30%. I'm not at all sure why this is occurring but it could have something to do with a so-called "delta-neutral" strategy using VIX futures as a hedge against VIX calls. This action may be even more extreme tomorrow as VIX options expire on Wednesday.

Going parabolic: If you're on the bear side of the oil trade, you'll be jumping for joy especially if you took a position in either of the 3x bear funds: Crude oil (DWTI) and Russia (RUSS). The DWTI shot up more than 12% today but that was chump change compared with the RUSS which soared over 35%. If you're lucky enough to be in these, you may wish to ratchet-up your stop-loss point just in case the trade goes against you. Parabolic stocks have the tendency to fall as fast or faster than when they rose.

Picking up Steam: The etfs of gold miners reversed course a few weeks ago and are continuing down unabated. The Junior Gold Miner etf (GDXJ) broke to a new all-time low since 2009 fund inception with the Gold Miner etf (GDX) following right behind. The 3x Bear Gold Miner etf (DUST) jumped 20% just today to close at $32. It appears that it wants to make a run to its early November high at $50.

Also on the metals front, shares of the Steel etf (SLX) broke below $35 support and it, too, appears to be heading south. Next stop could be in the low to mid 20's.

Butt ugly: It's interesting that while some pundits are saying that oil is close to bottoming, it sure doesn't appear that way from the charts. Two of the most widely held Oil funds, USO & OIL, both broke below their early 2009 lows, losing nearly 5% on the day. So far, there's no sign of a bottoming pattern forming.

Currency slips: Not surprisingly, the fall in oil and metals has put pressure on the currencies of countries that supply these resources. Most notable are the Canadian dollar (FXC) and theAussie dollar (FXA). Both exchange-traded funds hit multi-year lows today.