Here is what it actually says:
A sailor called Rodrigo de Traina saw this land first, although the Admiral at 10 o'clock at night being in the stern forecastle {castillo de popa} saw a light, but it was so concealed that he would not declare it to be land: but he called Pero Gutierrez Groom of the Chamber of the King, and said to him that it appeared to be a light, and asked him to look at it: and he did so and saw it. He also told Rodrigo Sanchez de Segovia, whom the King and Queen sent with the fleet as Inspector, who saw nothing because he was not where he could see it. After the Admiral told it, it was seen once or twice, and it was like a small wax candle which rose and fell, which hardly appeared to be an indication of land. But the Admiral was certain that they were near land.
So no mention of the light being in the sky. They correctly thought it was fires on shore. As far as the Bermuda triangle... Stop using the history channel as a primary source.
P.S if you read Spanish you can see that the original log is even more clear.