As we just noted, the CBOE Volatility Index (VIX) is cheap in absolute value. But there's another side to that coin.

Yes, VIX is high vs. itself. By "itself," I mean its 10-day simple moving average (SMA). VIX closed about 25% above its 10-day SMA, and we all know what that means: more tables! Or at least the same table, only updated.

This "rule" won't keep working forever. We're six years into a strong market, and I conveniently only run this table back six years. If I went back to 2008, you'd see some absolute disasters. Overbought VIX got more overbought … then again, basically every contra indicator failed. If I went back to the beginning of VIX time, you'd see more of the same as what you see here. 

It's generally correct to get bullish when VIX gets overbought. In fact, before 2008, and absolutely speaking before 2001, VIX was pretty universally considered a mean-reverting statistic. It was just another sign of an extended move. What the accidents of 2000 and 2008 taught us was that moves can often get extended, and we "crash" off already-oversold conditions. 

In all fairness, though, no one had heard of the VIX until after 2000. It wasn't anything at all magical; it was just something up on the Quotron (look up Quotron, kids!) that we all ignored. It wasn't tough to know what was happening in volatility when all you were doing all day was pricing options vs. public order flow.

I don't really believe an implosion is about to happen now. I mean, anything's possible, but my guess is that if we get ugly, it's more 2011-style ugly. 

If you want a scary parallel, check out those July 29, 2011, returns. Ugly, ugly, ugly. But it's not a perfect match. VIX was in the mid-20s at the time … and I'm sure someone was saying it should have been much higher. And hey, they were right for a change.

As to VIX itself, this is an unusually low absolute level for it to get overbought. In fact, this would mark the second-lowest absolute level amidst a 20% violation since 2009. The lowest was last July, when VIX got overbought at a mere 14.54. And that wasn't a real good signal at all. We basically caught our breath and got more overbought two weeks later. Returns were flat one month out, and actually weak three months out. 

We're kind of in the middle of these two scenarios. VIX is absolutely low, but relatively high (if that makes any sense). And clearly the news flow is quite bad. Greece was overcovered, but a crash in China is obviously not something to take lightly. There are no Chexits and Cheferendums out there to make fun of. 

Disclaimer: Mr. Warner's opinions expressed above do not necessarily represent the views of Schaeffer's Investment Research.

Analysts are weighing in today on mobile phone brand BlackBerry Ltd (NASDAQ:BBRY), Wall Street rookie Paypal Holdings Inc (NASDAQ:PYPL), and drugmaker Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA). Here's a quick roundup of today's bullish brokerage notes on BBRY, PYPL, and TEVA.

• BBRY is poised to pop nearly 3% at the open, following a bullish note from Morgan Stanley. Specifically, the brokerage upped its rating on the stock to "equal weight" from "underweight," citing the company's "flexibility with cash and opportunity for opex cuts." Last night, BlackBerry Ltd settled at $7.28, and if it can make a decisive move north, there's plenty of room to run. Over 21% of the equity's float is sold short, representing more than two weeks' worth of pent-up buying power, at typical daily volumes. Also, additional upgrades could come down the pike, considering 18 of 22 analysts rate BBRY a "hold" or worse.


• Jefferies initiated coverage on PYPL with a "buy" rating and $44 price target. The stock has received a lot of upbeat attention since going public earlier this month, but on the charts, has been pulling back since topping out at a record $42.55 on July 20. Specifically, Paypal Holdings Inc has surrendered 14.5% since then, settling Monday at $36.39. Meanwhile, options traders have been buying to open calls over puts at a rapid-fire rate. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), PYPL's 10-day call/put volume ratio is 6.52. These bulls may be rewarded this morning, with the stock pointed 1.4% higher in electronic trading.


• TEVA, which will hit the earnings stage Thursday morning, made headlines yesterday with a pair of M&A updates. It's more of the same today, with the company reporting the European Medicines Agency has confirmed a successful validation of its reslizumab marketing authorization application. In addition, Teva Pharmaceutical Industries Ltd has received a number of positive notes. For example, BMO upgraded the stock's rating to "outperform" from "market perform," and boosted its price target to $80 from $75, while Leerink bumped its price target by $10 to $84. Options traders still aren't sold, however -- the equity's 50-day ISE/CBOE/PHLX put/call volume ratio of 1.19 sits only 4 percentage points from an annual peak. On the charts, it's been a good year for TEVA, especially after the security jumped over 16% yesterday -- and notched a record high of $72.15. Specifically, the shares have advanced 25.2% in 2015.

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The Dow Jones Industrial Average (DJIA) looks poised to start on a positive note this morning, as the Federal Open Market Committee (FOMC) convenes its two-day policy meeting.  In equity news, today's stocks to watch include automotive firm Ford Motor Company (NYSE:F), auction giant eBay Inc (NASDAQ:EBAY), and technology and manufacturing company Honeywell International Inc. (NYSE:HON).

• F easily surpassed expectations with its second-quarter earnings report this morning. Ford Motor Company earned 47 cents per share during the second quarter, topping analyst estimates by 10 cents per share. The automotive company attributed the earnings performance to strong pricing in North America -- driven by the company's revamped F-150 pickup truck. We could see a bit of bearish sentiment unwind in the wake of this morning's news, as F saw put buying accelerate ahead of its earnings report. F is poised to start the session on a positive note, as the shares are nearly 2.5% higher in pre-market trading action, after settling Monday at $14.58.  


• After the closing bell sounded yesterday, online auction giant eBay Inc announced that it is putting an end to its one-hour domestic delivery service. EBAY noted that the service -- called eBay Now -- provided "encouraging results" but emphasized that the program was "always intended ... as a pilot." Technically speaking, EBAY's performance is picking up, thanks to support from its 10-day moving average. The stock is up 18.5% year-to-date, and finished Monday at $28.00. Option players are bullishly aligned toward the equity, as EBAY's Schaeffer's put/call open interest ratio (SOIR) of 0.40 is lower than 94% of the readings taken in the past 52 weeks. While option players are upbeat, analysts have some room for upgrades. Seventeen of the 26 brokerages tracking the auction house rate it a "hold" or worse -- leaving plenty of room for bullish notes to help further the stock's current winning streak.


• The final stock in our morning news roundup is HON -- which announced that it will purchase gas, electric, and water meter producer Elster for $5.1 billion. Honeywell International Inc. CEO Dave Cote stated that Elster has "outstanding technologies, brands, energy efficiency know-how, and global presence, all of which we are very well-positioned to build on." Technically, HON is in the midst of a rather impressive run higher. Since late 2011, the shares have roughly doubled in value, depending on the support of their 10-month moving average. After closing Monday at $101.64, HON is set to open fractionally higher.

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Analysts are weighing in today on Beijing-based search engine Baidu Inc (ADR) (NASDAQ:BIDU), business review site Yelp Inc (NYSE:YELP), and oil-and-gas issue Chesapeake Energy Corporation (NYSE:CHK). Here's a quick roundup of today's bearish brokerage notes on BIDU, YELP, and CHK.

• BIDU is smarting this morning, following an earnings miss, weak current-quarter guidance, and a resultant round of bearish analyst notes. Among the brokerages weighing in are Pacific Crest and Brean Capital -- which lowered their opinions to the equivalent of a "hold" from a "buy" -- and Piper Jaffray, which slashed its price target to $210 from $230. As such, Baidu Inc has plunged 13.5% at the open to trade at $171.25 -- a bigger-than-expected post-earnings move -- and skimmed a new annual low of $170.22. There's plenty more room for additional bearish attention, as 73% of analysts consider the stock a "strong buy," with not a single "sell" to be found. Similarly, BIDU's average 12-month price target of $242.96 represents a 42% premium to the current price.


• YELP is down 2.5% in early trading at $32.92, ahead of tonight's earnings release. Expectations are low heading into the event, with short interest soaring 43.2% during the latest reporting period -- and now representing 17% of the equity's float. In addition, Yelp Inc's rating was downgraded to "hold" from "buy" at Deutsche Bank, which also slashed its price target to $33 from $56. Of course, the shares haven't given the Street many reasons to be confident. YELP has surrendered roughly 40% this year, and earlier touched a two-year low of $32.55.


• Spiraling oil prices have crushed energy stocks, and CHK is no exception. Although the shares are 1.1% higher this morning at $8.48, they're down nearly 57% year-to-date, and hit a 12-year low of $8.11 yesterday. Earlier, Wunderlich weighed in on a number of energy names, including Chesapeake Energy Corporation -- reducing its price target to $13 from $24. Wunderlich isn't alone in its bearish assessment. Eighty-five percent of covering analysts have tagged CHK with a "hold" or worse opinion, while almost 30% of the stock's float is sold short -- representing nearly two weeks' worth of activity, at typical volumes.

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If you're a tech junkie, then you surely know Microsoft Corporation's (NASDAQ:MSFT) Windows 10 operating system is scheduled to debut tomorrow. Ahead of this event, MSFT is being showered with praise from several quarters.

Barron's featured MSFT prominently in its most recent issue from over the weekend. In an interview with Ariel Investments' Rupal Bhansali (subscription required), the money manager waxed optimistic on the blue chip. "We all love consumer staples for their stability. Microsoft is an enterprise staple; it's a must-have for a business," Bhansali said. "It has also moved from a license-based model to subscription-based, which means a big portion of it sales are coming from multi-year, recurring revenue. This stability has not come at the expense of growth."

A separate article touted MSFT shares, saying they could rise 50% over the next three years, due to the company's transformation into a power in cloud computing. "The stock is a good deal," according to the author. Later, he adds, "Microsoft has generated cash flow with the steadiness of a consumer-staples company, while paying plump dividends and gobbling up its own stock. A year from now, shares could fetch $55, for a total return of more than 20% including dividends."

More broadly speaking, the majority of analysts consider MSFT a "buy" or better, with only two doling out "sell" ratings. Also, less than 1% of the stock's float is sold short, suggesting a general lack of skepticism.

This enthusiasm isn't uniform, however. In particular, option players have expressed doubts, and massive front-month put accumulations at underfoot strikes could be supportive in the short term. An unwinding of the hedges related to these positions potentially feeds into the bullish case.

Moreover, while Microsoft Corporation (NASDAQ:MSFT) recently sold off on its latest earnings report -- which included a $3.2 billion net quarterly loss -- it maintained its footing atop the $44 level -- site of its post-bear gap highs in late February and early March, as well as its post-bull gap lows earlier this month. In addition, support from its 80-week moving average could push the stock up the charts.

U.S. stocks are modestly higher today, as traders digest the latest earnings reports and await a key Fed meeting. Among the companies about to step up to the earnings plate are alternative energy issue SunPower Corporation (NASDAQ:SPWR), mining name Cliffs Natural Resources Inc (NYSE:CLF), and social networking titan Facebook Inc (NASDAQ:FB). Below, we'll take the pre-earnings temperature of SPWR, CLF, and FB.

• SPWR will unveil its second-quarter figures after the close tonight. Over the past eight quarters, SunPower Corporation has averaged a single-session post-earnings move of 7.1%. This go-round, traders are expecting a slightly bigger swing, as the equity's near-term at-the-money (ATM) straddle suggests the options market is pricing in an 8.3% move. Speculators have favored long puts over calls during the past two weeks on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The security's 10-day put/call volume ratio of 1.41 stands higher than 82% of all other readings from the past year, pointing to a bigger-than-usual bearish bias. On the charts, SPWR has added 1.4% today to sit at $25.47, but has spent the past month sliding beneath its 10-day and 20-day moving averages. The shares are also staring up at their year-to-date breakeven level of $25.83. 


• A rebound in commodity stocks has CLF flirting with an 8.8% lead at $2.61. However, the shares remain almost 64% lower year-to-date, and just touched a decade-plus low of $2.28 a week ago. Against this backdrop, short sellers have piled on, with these bearish bets now accounting for more than half of Cliffs Natural Resources Inc's total float. Likewise, the stock's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.12 registers in the 80th percentile of its annual range. What's more, CLF's short-term option bears are paying up to place pre-earnings bets, as the security's Schaeffer's Volatility Index (SVI) is docked at an annual high of 120%. Historically, the equity has averaged a one-day post-earnings move of 7.3% over the past eight quarters. Option traders are pricing in a much bigger swing of 14.8% after tomorrow morning's release, per CLF's near-term ATM straddle.


• Finally, FB will follow sector peer Twitter Inc (NYSE:TWTR) into the earnings confessional, with the company set to report second-quarter figures after tomorrow's close. Over the past eight quarters, FB has averaged a move of 7.9% in the session subsequent to reporting. Expectations are in line with history, as the stock's near-term ATM straddle is pricing in an 8.4% swing. Option buyers have been stacking up their bullish bets ahead of earnings, as Facebook Inc's 10-day ISE/CBOE/PHLX call/put volume ratio of 3.17 stands higher than just 97% of all other readings from the past year. Short-term speculators are paying a pretty penny, too, as FB's SVI of 52% is docked at an annual high. Since touching a record high of $99.24 last week, FB has taken a breather. The shares were last seen 0.4% lower on the day, at $93.81.

Biotechs are in focus today, following earnings from a number of notable names -- as well as the latest round of news from headline-making Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA). Drilling down, specific drugmakers grabbing the attention of Wall Street today include Merck & Co., Inc. (NYSE:MRK), Pfizer Inc. (NYSE:PFE), and Gilead Sciences, Inc. (NASDAQ:GILD).

MRK reported better-than-expected second-quarter earnings and upped its full-year profit forecast amid growing demand for its diabetes and cancer treatments. Additionally, the company waxed optimistic over its $8.4 billion acquisition of Cubist Pharmaceuticals Inc, and said it bought cancer immunotherapy specialist cCAM Biotherapeutics. At last check, the security was up 0.6% at $57.35, after earlier bouncing from $56 -- an area that contained pullbacks in late October and mid-March.

Option traders, meanwhile, had been bracing for a post-earnings pullback. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Merck & Co., Inc.'s 10-day put/call volume ratio of 1.01 rests in the 81st annual percentile. Simply stated, puts have been bought to open over calls at a faster-than-usual clip in recent weeks.

Fellow Dow component PFE also unveiled its earnings report, with the firm's second-quarter results topping estimates. What's more, the company raised its full-year profit outlook, after global vaccine sales jumped 44%. The fundamental win has sent the shares 1.7% higher today to trade at $34.95. Longer term, PFE has tacked on 12.2% year-to-date, and is within striking distance of its April 13 10-year high of $35.53.

Similar to MRK, skepticism has been running high in PFE's options pits, per the stock's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.23 -- in the 92nd percentile of its annual range. Plus, 63% of analysts still maintain a "hold" or "strong sell" rating on Pfizer Inc. Should the security continue its uptrend, a capitulation from option bears and/or a round of upgrades could help fuel its fire.

GILD -- which will step up to the earnings plate after tonight's close -- last night announced a pair of new additions to its senior leadership team. The stock initially swung 2.2% higher out of the gate, but was last seen up 0.7% at $111.28. Year-to-date, shares of GILD have added 18%, and after hitting an all-time high of $123.37 in late June, have pulled back to their rising 80-day moving average.

Call players have been flooding the equity's options pits in recent weeks. At the ISE, CBOE, and PHLX, Gilead Sciences, Inc.'s 10-day call/put volume ratio of 3.55 sits just 10 percentage points from a 52-week peak. Echoing this is the stock's gamma-weighted Schaeffer's put/call open interest ratio (SOIR) of 0.65, which indicates near-the-money call open interest outweighs put open interest among options expiring in three months or less.

Analysts are weighing in today on social network Facebook Inc (NASDAQ:FB), chip concern QUALCOMM, Inc. (NASDAQ:QCOM), and drugmaker Regeneron Pharmaceuticals Inc (NASDAQ:REGN). Here's a quick roundup of today's bullish brokerage notes on FB, QCOM, and REGN.

• FB, which is set to report earnings Wednesday evening, announced plans over the weekend to expand its Internet.org initiative in India. This morning, the stock is on the receiving end of price-target hikes from Cowen and Company (to $110), SunTrust Robinson (to $125), and Raymond James (to $110). The bullish notes are well-deserved, considering Facebook Inc shares have shot up more than 24% year-to-date to trade at $96.95, and last week touched a record high of $99.24 following a prior round of positive analyst attention. Option traders, too, expect more upside from FB. During the last two weeks across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity has amassed a call/put volume ratio of 3.16, which ranks in the 97th percentile of its annual range.


• Amid news that QCOM has appointed a new president for its India-based business, Morgan Stanley upgraded its rating on the stock to "overweight" from "equal weight." The bullish outlook is curious, given the security's 17% year-to-date deficit at $61.64 -- as well as its two-year low of $60.83, touched last Thursday on the heels of lackluster guidance. In fact, unless it reverses its technical trajectory, QUALCOMM, Inc. looks vulnerable to future downgrades and/or price-target cuts. Fourteen of 24 analysts currently rate the underperformer a "buy" or better, and its consensus 12-month price target of $71.90 stands at a 16.7% premium to Friday's close.


• REGN saw its price target raised at RBC (to $570), Jefferies (to $502), and BMO (to $494). On the charts, the stock has been a beast, surging almost 79% year-over-year to rest at $541.85, benefiting from consistent support atop its 10-week moving average. Option traders aren't sold on Regeneron Pharmaceuticals Inc, though. The stock's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.51 ranks above 90% of comparable readings from the previous year. Echoing this, REGN's Schaeffer's put/call open interest ratio (SOIR) of 1.35 sits in the 73rd percentile of its annual range. A reversal in this negative sentiment could spark a move higher. One possible catalyst could be the company's upcoming earnings report, due out the morning of Tuesday, Aug. 4.

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Momentum players beware: the trend is not your friend right now. The U.S. equity market had a nice rally from July 10 through July 17, and the S&P 500 Index (SPX - 2,079.65) once again found itself bumping up against its previous 2015 peak. The 2,110-2,130 area has come into play as resistance in February, March, April, May, and June.  If you do the simple math and add the month of July, we've hit this area during six of the seven months so far this year! Ouch.

The good news is that Greece isn't dominating the headlines like it has in previous weeks. Greece has started to pay back its debt again to the International Monetary Fund (IMF) and the European Central Bank (ECB). Never mind that it's being paid with new debt. Banks reopened in Greece, and for now, the fear of an infamous "Grexit," riots in Athens, and referendums all seem like a bad dream from which we've safely awoken.

With Greece off our backs for the moment, you might think we can finally breathe.  Well, gold decided to jump off a cliff last week, we were hit with a barrage of disappointing earnings reports, and China has given us a loud and clear "don’t forget about us."

Gold plummeted more than 4% on the week, and continues the slide it's been on since late 2012. With the malleable metal reaching levels it hasn't seen since February 2010, there is no doubt we will see more and more talk about the big 1,000 level that is now just a short skip away from its current price. Per the chart below, meanwhile, the SPDR Gold Trust (GLD - 105.35) is trading at five-year lows within reach of the $100 level.

The two big culprits that we continue to hear are responsible for gold's demise are China and the Federal Reserve. There is no doubt that demand has been poor from China -- the world's second largest economy. In fact, the country’s purchasing managers index (PMI) was released last Friday, and slipped to 48.2 in the preliminary reading. This is a survey of small- to medium-sized firms regarding new orders, inventory levels, production, supplier deliveries, and the employment environment. A reading below 50 is considered a contraction, and a reading above 50 represents expansion. Well, July's figure is the fifth straight month it has been below 50, and marks a new 15-month low. Investors are also expecting interest rates to increase by the end of this year, which may push the U.S. dollar higher -- and create a headwind for commodities like gold.

Despite the lingering news of Greece, China, and gold, U.S. companies received a lot of attention last week amid a slew of earnings reports.  Big names like Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), Biogen Inc (NASDAQ:BIIB), International Business Machines Corp. (NYSE:IBM), Visa Inc (NYSE:V), and many others all reported earnings. On June 30, the consensus earnings estimate for the second quarter was negative 4.5% and -- so far -- earnings have been better than expected. However, the results are still on pace for the first year-over-year quarterly decline since the third quarter of 2012. The story of whether companies can avoid a rare losing quarter may grab some headlines in the coming weeks. 

Regardless of what headlines crossed the newswires, price action last week told a simple story -- selling. After pausing at its former 2015 high on Monday, the rest of the week was a sea of red for the SPX. Thursday and Friday delivered the bulk of the losses, as major market indexes finished near their lows by the end of each trading session. At the end of the week, the SPX found itself off more than 2% from the previous Friday's close.

Digging deeper within the market, one can find a lot of different stories. While the SPX and Dow Jones Industrial Average (DJIA - 17,568.53) continue to battle the top of their respective ranges, the tech-heavy Nasdaq Composite (COMP - 5,088.63) broke out above its previous highs two weeks ago -- and is now pulling back to its former peak after last week's sell-off. While technology is outperforming, small-caps and mid-caps -- as represented by the Russell 2000 Index (RUT - 1,225.99) and the S&P MidCap 400 Index (MID - 1,476.74), respectively -- have been underperforming since the beginning of July.

The large swing to the downside last week just adds to the narrative of the choppy, sideways price action of 2015. Pullbacks have continued to be buying opportunities, but gains on these purchases have been minimal, and U.S. equities have consistently failed to gain traction for longer than one or two weeks at a time.

Last week, Schaeffer's Senior VP of Research Todd Salamone mentioned the potential for an SPX pullback to the 2,070-2,075 area, which is a 61.8% retracement of the early July low and 2015 high. After this latest market retreat, the SPX sits less than 1% above this area. In addition, the 2,050 area on the SPX has proven to define the bottom of the range since early March.

One of the bigger-picture themes of 2015 has also been the positioning of global fund managers, who continue to bet on Europe and Japan more than U.S. equities. In Bank of America-Merrill Lynch's July survey, U.S. exposure was negative 7% underweight -- an increase from negative 19% underweight in May. Based on this month's results, it appears managers are starting to reduce their exposure to emerging markets, Europe, commodities, and bonds, and are moving assets into U.S. equities. Managers are still 37% overweight Japan, their highest level since April 2006, and 40% overweight Europe. Any rotation into U.S. equities that occurred this past month is still in the early innings, and a continuation of this rotation could create support for U.S. equities.

Although short-covering related to standard July expiration wrapped up earlier this month, the chart below still shows that short sellers are less than optimistic toward the U.S. market. Checking out the data, it appears that short interest on SPX stocks is at its highest level since the summer of 2012, up more than 8% since the beginning of the year. This is another sentiment indicator that could be potentially supportive of a market that remains in a trading range.

Looking ahead, this week will be another very busy one for earnings reports, especially a lot of energy stocks. Popular names like Ford Motor Company (NYSE:F), Pfizer Inc. (NYSE:PFE), United Parcel Service, Inc. (NYSE:UPS), Twitter Inc (NYSE:TWTR), MasterCard Inc (NYSE:MA), Chevron Corporation (NYSE:CVX), and Exxon Mobil Corporation (NYSE:XOM) are all up to bat.

On the economic front, durable goods are due out on Monday, consumer confidence on Tuesday, and the Chicago PMI on Friday. However, the big economic event will be the Federal Open Market Committee (FOMC) rate decision on Wednesday. Nobody is really expecting a rate hike this month, but all ears will be listening for clues as to when we might get the first jump in interest rates. At this point, it's not a matter of if, but when.

Read more:

Indicator of the Week: Inside a Historic First for the SPX
The Week Ahead: Fed, Facebook in Focus

U.S. stocks are set to start the week on a rough note, after China's Shanghai Composite plunged 8.5% -- turning in its worst daily performance since 2007. In company news, today's stocks to watch include pharmaceutical company Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA), Standard & Poor's parent McGraw Hill Financial Inc (NYSE:MHFI), and Chinese search giant Sohu.com Inc (NASDAQ:SOHU).

• TEVA is making news this morning, announcing that it has agreed to purchase Allergan PLC's (NYSE:AGN) generic drug business for $40.5 billion in cash and stock. As a result of this deal, Teva Pharmaceutical Industries Ltd (ADR) is dropping its $40 billion hostile takeover bid for Mylan NV (NASDAQ:MYL). This news is going over well, as TEVA is set to start the morning more than 12% higher -- and possibly flirt with record highs -- after closing Friday at $61.85. Watch for more news from TEVA this week, as it will announce earnings on Thursday. The option pits are bearishly aligned toward TEVA ahead of the announcement, as the firm's Schaeffer's put/call open interest ratio (SOIR) 0.64 ranks in the 70th annual percentile. Should TEVA impress the Street, we could see some of this bearish sentiment unwind.

• MHFI is also getting in on the acquisition fun, announcing that it will buy financial data firm SNL Financial. McGraw Hill Financial Inc will dish out roughly $2.23 billion to purchase the company from private equity New Mountain Capital LLC. The cash deal is expected to add to MHFI's earnings in 2016. Meanwhile, the company also reported stronger-than-expected second-quarter earnings. Technically, MHFI has been a solid performer, but has spent the past few months battling a wall in the $109 region. The shares closed at $105.58 on Friday, and are pointed higher ahead of the bell.

• Finally, Chinese search engine SOHU is 6% lower in pre-market trading -- and in danger of hitting new lows -- after announcing quarterly earnings and after China's brutal trading day. Options players were aligning themselves on the bearish side of the spectrum ahead of the earnings report, as SOHU's SOIR of 0.62 was higher than 82% of the past year's worth of readings. Technically, shares of Sohu.com Inc have wilted 16% in 2015, and closed at $44.68 on Friday.

Speaking of Fear …

Cue the "I can't believe the market is this ugly and $VIX is only 13-full" chorus! (In fairness, its not the worst observation ever)

— adam warner (@agwarner) July 24, 2015

What he said. OK, seriously, I'm not a big fan of making observational judgements based on the absolute value of CBOE Volatility Index (VIX) and where I think it "should" print. But right here, right now? Yeah, why isn't VIX higher?

1. Ugly market?

Check (sort of). We dropped 1%-ish on Friday, taking all the way back to levels not seen since … about two weeks ago. So let's call it ugly, but not catastrophic. 

2. Cheap vs. realized volatility? 

Not really true. Ten-day realized volatility in S&P 500 Index (SPX) is about 10 right now. When VIX is in this range (which seems like always), we typically see about a 4-point premium of implied over realized. That's close to what we see now. VIX is only slightly low by this metric, and given it's inexact, we can call it a rounding error. 

3. Cheap vs. expected news flow? 

This seems accurate. Bad news out of China? Check. Not only today's sell-off, but this, from MarketWatch:

"Taylor Swift is the latest to take on counterfeiting in China.

As the American pop star's popularity in China has exploded, so has a huge market of unauthorized Taylor Swift products, with e-commerce peddlers selling everything from fake perfume to pirated autographed guitars." 

Maybe we can get past that one, but perhaps more importantly, this, from CNBC:

"'I think the market's very much concerned about the commodity (decline),' said John Lonski, chief economist at Moody's. 'The contraction in China manufacturing activity is gaining momentum and the credit market has yet to signal that rates are not about to go higher.'"

Plunging oil prices, worries about China and rate hikes? Sounds like a greatest hits of "Scary Market News '14-'15." At least Greece is finally behind us, per Yahoo! Finance: 

"Talks between Greece and its international creditors over a new bailout package will be delayed by a couple of days because of organizational issues, a finance ministry official said on Saturday." 

OK, guess that's not done yet either. All in all, it's kind of bizarre dynamic. We're simultaneously obsessed enough with the same few recurring global stories that the market can't go higher, yet not so concerned with them that we bid options prices up all that much. 

We really need to break out of our 2015 range. I was hoping for an upside blast, but maybe we really do need some sort of shakeout before we can rally for real. 

Disclaimer: Mr. Warner's opinions expressed above do not necessarily represent the views of Schaeffer's Investment Research.

Analysts are weighing in today on food-ordering app GrubHub Inc (NYSE:GRUB), drugmaker Mylan NV (NASDAQ:MYL), and Greece-based transportation issue Diana Shipping Inc. (NYSE:DSX). Here's a quick roundup of today's bearish brokerage notes on GRUB, MYL, and DSX.

• Cowen and Company lowered its opinion on GRUB to "market perform" from "outperform," and slashed its price target to $30 from $39. The negative note -- which comes just ahead of the company's second-quarter earnings report, due out tomorrow morning -- has the shares 10% lower at $30.40. In fact, since hitting a record high of $47.95 in late March, GrubHub Inc has surrendered 36.6%. This could set the stage for future downgrades and/or price-target cuts, as all 14 covering analysts consider the shares a "buy" or better. What's more, GRUB's consensus 12-month price target of $47.88 sits in territory not charted in nearly four months.On the flip side, options traders remain quite bearish toward the security.
  


• MYL's buyout bid from Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) has been withdrawn, as the latter agreed to purchase Allergan PLC (NYSE:AGN) instead. The news has leveled Mylan NV shares, down 14.2% at $56.60 -- nearly wiping out the equity's year-to-date lead. Adding insult to injury, Cowen and Company downgraded the stock to "market perform" from "underperform," and reduced its price target to $65 from $80. The bear gap is a welcome development for recent put buyers. During the last 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open puts over calls at an accelerated clip, per MYL's put/call volume ratio of 0.46, which ranks in the 72nd annual percentile.


• DSX is down 3.2% out of the gate at $7.27, following a downgrade to "sell" from "hold" at Evercore ISI -- though the brokerage firm upped its price target to $6 from $5.50. Still, the shares remain 8.3% higher year-to-date. Short sellers foresee more downside ahead for Diana Shipping Inc., with short interest spiking 23.5% during the last two reporting periods. At present, 6% of the stock's float is sold short, which would take more than a week to repurchase, at DSX's typical daily trading clip. Looking ahead, the company will hit the earnings confessional on Friday morning.

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