The S&P 500 lost the critical 2000 level on Thursday despite a positive surprise from the European Central Bank, which cut interest rates deeper while teeing up the asset-backed bond purchase program that’s been eagerly expected.

While not quite Fed-style quantitative easing — it won’t involve the purchase of government bonds — it was close enough for the cheap money junkies to feel fulfilled.

This rocked the currency markets, sending the dollar soaring against the euro and slamming dollar-sensitive commodities as a result. With the ECB taking the fight to low inflation, you would think that inflation hedges like gold and silver would’ve benefited, but that wasn’t the case: gold, silver and crude oil were all pushed lower.

Click to Enlarge Stocks stormed out of the gate but eventually succumbed to another day of intraday selling pressure as the junk bond market fell away from multimonth resistance. The pattern of early-day rallies and late-day selling pressure near overhead resistance is a classic sign of heavy distribution.

Historically, that’s been a sign of trouble.

In the end, the Dow Jones Industrial Average lost 0.1%, the S&P 500 lost 0.2%, the Nasdaq lost 0.2%, and the Russell 2000 lost 0.4%.

This isn’t a story that’s generating much attention, but it’s really important: Junk bonds are arguably one of the most bubbly areas of the financial system right now and are vulnerable to any policy tightening from the Federal Reserve. And they’re looking very shaky right now.

This could be in preparation for Friday’s jobs report. Another strong performance will all but assure a more hawkish statement from the Federal Reserve’s policy meeting later this month as well as the end of the QE3 bond purchase program in October.

Another dynamic still in play is the situation in Ukraine, where hopes are high that a ceasefire deal will be negotiated between Kiev and pro-Russian rebels tomorrow amid an ongoing NATO conference. But reports are crossing that pro-Russian forces, with the support of Russian tanks, have started attacking the key port city of Mariupol.

Click to Enlarge In response to the weakness, I recommended two new put option positions against the energy sector to Edge Pro clients today. The first is another position against Exxon Mobil (XOM) with October expiration. The other is a September position against energy services provider Schlumberger (SLB).

It’s worth remembering that the bears are eager to come out of hibernation, because there are simply so few left. You can see this in the way the Investors Intelligence Bull-to-Bear Ratio has surged to new highs as the number of bears falls to the lowest level since 1987.

And one gets the feeling that volatility is returning to the market after a calm summer: Crude oil has suffered some serious price whipsaws this week, with one of the largest positive reversals in 30 years.

Buckle up. It seems things are about to get exciting.

Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters, as well as Mirhaydari Capital Management, a registered investment advisory firm. As of this writing, he had recommended XOM and SLB puts to his clients.