Stocks pulled back to Tuesday’s lows on Friday in the wake of a U.S. nonfarm payrolls report that has been interpreted as reflecting an economy that is heating up enough to generate inflation.

This is, of course, an absurd point of view, as the report came in mostly weaker than expected and U.S. inflation has all the strength of a wet kitten.

So, what appears to actually be happening is a normal, structural decline in prices that is viewed as a test of bulls’ willingness to buy at recent lows. If the bulls show up again at the Sept. 1 lows, bears will back off and give them safe passage back up to new relative highs. If not, sellers will gain the confidence to push stocks all the way back to the Aug. 24 low, where a real battle royale would ensue.

Many current market participants have never seen a market environment like this one, but they are not all that uncommon. The market is down 7.4% since June, and investors have overreacted by buying about 10x more protective puts than they really needed as insurance, which translates to the spike seen in the S&P 500 Volatility Index (VIX).

Although the jobs report was weaker than most expected, it probably won’t change many minds either in the markets or on the Federal Reserve Board. If you’re a hawk, you’ll worry about a month of 0.3% wage growth and point out that even 173,000 a month in job growth will lower an unemployment rate that could break below 5% in a month or two. If you’re not, you’ll point to the modest trend growth in wages and the fact that we’d still have to add nearly 6 million jobs to get back to the 2006 employment/population ratio.

Friday’s advance in the VIX for now is most likely part of the bottoming process — at least, so long as it doesn’t get out of hand from here. The VIX is setting lower lows, though it’s hard to see that perhaps without a magnifying glass and a bit of optimism. That being said, certain stocks are definitely in trouble at this point, and today I’m recommending one for a bearish trade: Caterpillar Inc. (CAT).

CAT shares have suffered in recent months due to their high level of exposure to mining and overseas sales. The entire equipment-maker group was hammered on Sept. 3 after mining equipment maker Joy Global Inc. (JOY) reported weak results.

Short (sell to open) CAT at $73.50 limit, good till canceled (i.e., at $73.50 or more). If filled, cover all (buy back to close) at target $69.25 limit, good till canceled.

Jon Markman writes a daily trading newsletter, Trader’s Advantage, and CounterPoint Options, a service geared towards helping individual traders make steady, consistent profits with the VIX. Follow him on Twitter for his latest take on markets and innovation, and be sure to check out his Top Stock for 2015 here.