I sometimes use the VIX as a gauge of fear/volatility in the marketplace. Generally a high VIX value greater than 30 or a value significantly higher to where it had been trading in the recent past, can help signal a market bottom. The VIX measures implied volatility on S&P500 index options.

But in recent months, it seems that there is much greater volatility diversity within the S&P500 index. There have been many days where the S&P500 was relatively flat, but financials were down big and energy stocks up big (or vice versa).

Today was another example where the S&P index hid the fear in the market. The S&P500 was down 2.31%, but this number masked some tremendous down moves, not just in small caps, but in large Dow Jones stocks.

Seven out of 30 Dow stocks had losses of 5% or higher today:
General Motors -11.08%
Citigroup -9.75%
Amer Int Group -8.87%
Bank Of America -8.37%
Amer. Express -7.45%
JP Morgan -6.72%
Boeing -6.28%

The XLF is an ETF for a group of financial stocks. I checked a few of the XLF near term options.
XLF closed at 20.95.
The August 21 XLF call has an implied volatility of 61. The put is 60.
The Sept. 21 XLF call has an implied volatility of 51. The put is 55.

I think these numbers reflect the fear in the market place today better than the VIX.