By one Wall Street gauge, a peak in anxiety may be near

Was today just manic enough on Wall Street to mark a short-term bottom in the stock market?

The Dow industrials slumped 227 points early in the day on Federal Reserve Chairman Ben S. Bernanke’s depressing assessment of the economy, rallied 295 points from the low (to a net gain of 68 points) as oil fell more than $6 a barrel and stayed there, then sank again in the final hour with financial stocks, as usual, leading the way down.

The Dow ended off 92.65 points, or 0.8%, to 10,962.54 -- the first close below 11,000 since July 2006. That extended the index’s decline from its October peak to 22.6%. Trading volume today was massive on the New York Stock Exchange.

The market is "alternating between euphoria and depression. Sometimes in the same hour," said Steve Todd, editor of the Todd Market Forecast in Crestline, Calif.

But it’s often when the market looks the nuttiest that it’s on the verge of wringing itself out.

The bulls got one sign they’ve been waiting for: The so-called VIX index, which measures Wall Street’s fear level by tracking activity in put and call option contracts on the Standard & Poor’s 500 index, jumped above the 30 level for the first time since mid-March.

The last four times the index has been above that threshold -- in August, November, January and March -- it foreshadowed that the market sell-off of that moment was cresting, and that a rally (however fleeting) was imminent. Go here for more on the VIX’s recent history, including a chart.

The VIX surged as high as 30.81 early today before falling back to close at 28.54, up from 28.48 on Monday.

Something else that could push the bears back, for better or worse: The Securities and Exchange Commission’s new plan to curb short selling of major financial stocks, as reported here.

Still, financial-stock sellers -- short and otherwise -- continued to drive many big-name issues to new multiyear lows today, indicating no let-up in fears about the state of the banking system. They have TVs on Wall Street; they can see those lines outside IndyMac Bank branches.

Investors are betting "there are going to be a lot more shoes to drop" in the financial sector, said Art Hogan, veteran trader at Jefferies & Co.

Fannie Mae fell $2.66, or 27%, to close at $7.07, Freddie Mac tumbled $1.85, or 26%, to $5.26, Bank of America slid $1.63, or 8.1%, to $18.52 and Citigroup was off 66 cents, or 4.3%, to $14.56. For Citi, that was the lowest closing price since the company was created by the October 1998 merger of Citigroup and Travelers Group.

Photo: Edvard Munch's Expressionist masterpiece "The Scream." Solum, Stian Lysberg/AFP/Getty Images