Whats puzzling is the VIX and put/call ratio have remained somewhat "ambivalent" at best since the SPX was sliding at around 780 SPX. The VIX has always spiked higher on Minor Wave 3's as compared to wave 1's. Also the CPC has always gotten put heavy consistently near the bottoms. But since near the low of wave 1(5) in January this has started to diverge. Are traders getting smarter? Hard to say that since the market keeps dropping and they keep betting rally.
In fact, the entire bear market, significant lows at many degrees the VIX and CPC have always spiked near or at the bottom together to combine for near term lows in each respective indicator.
So in conclusion I can only come up with a few logical answers:
1. Traders figure the bottom HAS to be near. Possible outcome: They prove to be correct and everyone makes big money (Is that even possible?)
2. Traders are in for a big surprise if/when the market just keeps dropping through the 600's possible high 500's. Outcome: They keep losing big. Eventually they get doubtful and fearful again in the right doses.
3. Traders have started to pay attention to Elliott Wave Theory. Possible Outcome: The waves will just keep stretching lower until Traders get "stupid" again.
Its scary. I think everyone would prefer a capitulation move. This slow bleed has me worried. The market is always right.
Feel free to comment. I do not claim to be a VIX or CPC expert.