Stocks rebound, but extreme risk aversion remains

After a week of enormous volatility, stocks could show signs of stabilising. There are increasing signs that markets are reaching extreme selling pressure and negative sentiment.

For instance, for the first time in history, traders bought many more puts (options betting on stocks going down), than call options, last week. Puts were 3x calls.

In addition, a lot of it was driven by small traders, buying just 10 options contracts or less. The fear trade could be too crowded now.

Today we will have earnings of Bank of America, Charles Schwab, and BNY Mellon.