Wall Street is Buzzing About This Trade

As extended as VRX was on multi-year timeframes, I have previously made the argument that the sell-off of late transcended even hedge fund titans like Bill Ackman. 

But as an offshoot to the theory of reflexivity, Wall Street is starting to smell blood and at least put Ackman to the test. 

This morning, the VRX (Ackman long) play is down roughy 16% as I write this. In addition, his other longs like APD ZTS PAH are getting hit. 

Also note even into a soft broad market, HLF, a name Ackman is short, is green. The daily chart below shows HLF working through a sideways channel, potentially ripe to squeeze higher over $58 if the market is going to press Ackman harder. 

While not quite on the level of what we see at various times in 2008, the market is clearly making assumptions and probing weakness regarding a player of size. At a minimum, it makes for great theater.

But if VRX does not stabilize soon, I suspect the above plays, long and short, are in play as momentum trades.