Stock indexes continue to sell off, and it could be a while before that trend reverses. Our index indicators continue to give bullish to neutral readings, unchanged from a week ago. But that is an intermediate-term reading. The shorter-term signal is bearish, as the indexes have not only failed to overtake their 50-day moving averages, those averages are now acting as resistance.

That they are doing so is consistent with standard technical analysis, which holds that old support becomes new resistance (and vice versa during a bullish phase, old resistance becomes new support). To begin building a new bullish trend, the Dow needs to rise back above 16,960, the S&P 500, 1,970, and the Nasdaq, 4,475. On the downside, the index’s 200-day moving averages are now key support. For the Dow, that support is currently at 16,540, for the S&P 500, 1,900, and the Nasdaq, 4,275.

Our internal indicators are confirming the weakness in the indexes. The 200-day Moving Averages Index is level 3 bearish and remains at its lowest reading since 2011, which was also the last time the indexes were in primary bearish trends. The Advance/Decline Index is level 1 bearish, and the Cumulative Volume Index has fallen to level 2 bearish. Three of the nine major S&P sector funds are bullish, a gain from one of nine a week ago. Although the bullish sectors are the defensive-oriented consumer staples, health care and utilities funds, it is something for bulls to hang their hats on. But volatility indexes are spiking higher, which is generally a major caution sign for bulls.

Treasury bonds (TLT) are continuing their rally and remain bullish by staying above $116. Strength in TLT is a positive for continued low interest rates. Meanwhile, junk bonds continue to sell off. They remain bearish and really don’t have strong chart support until the $39.40 area.

The U.S. dollar pulled back over the past few days but remains bullish. In turn, commodities continue to get crushed. Copper, gold and oil remain in solid bearish trends, and oil looks to be in a freefall. While the combination of lower commodity prices and lower interest rates is beneficial for the U.S. economy, what that combination is really implying is that the global economy could be headed for major trouble. And that would spell trouble for U.S. corporate profits, as would a stronger dollar, which deflates the value of U.S. earnings generated overseas.

With stock indexes and indicators remaining bearish, options traders should continue to lean toward buying put options and reducing call holdings. It could be a while before stocks get their footing underneath them, as we are not even a third of the way through the historically weak month of October. However, the upcoming U.S. mid-term elections could set a positive tone, so a reversal of the current negative sentiment could be in the future. Nevertheless, caution is key, which is why I’ve got a put option trade for you today.

Buy the Mattel (MAT) Jan 29 Put options at $1.30 or lower (MAT shares closed Thursday at $30.60). After entry, take profits if the stock price hits $28.40 or the option price hits $2.30. Exit if the stock price closes above $31.70.

If the Mattel name looks familiar to you, it should – it was also my bearish trade pick from last week with the MAT Nov 30 Puts. It’s not unusual for my system to identify multiple opportunities in the same stock and to play them with a couple of different options with varied expiration months and/or strike prices. The MAT Nov 30 Puts started to inch forward in Thursday’s session but still have plenty of time to hit their targets within my three-week holding perimeters. (Remember, I do not recommend holding an option play for more than three weeks to avoid time decay.)

With futures down ahead of Friday’s trading, we may not even need to wait much longer. Just be mindful that MAT reports earnings on Oct. 16 and any excitement about the numbers could evaporate profits in the puts, so don’t be too cute about taking profits that are shy of my targets, especially in a choppy market like this.

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