Next Stop for the Fear Train Is...

A powerful downtrend in the market has yet to create some real fear and raw emotion among market players, with a certain degree of aloofness perhaps dominating the tape. 

As evidence, consider several major indices and sectors now below their respective August 2015 lows, while the VIX (which measures fear or volatility in the options markets) is still well below its August highs. 

Equity bulls will argue this divergence means that there truly is not much to worry about, and that the slide in stock prices is nearly over. Equity bears, however, will counter, that the divergence signifies a large degree of complacency, meaning market players should be fearful but instead are choosing to bury their heads in the sand. 

In reality, observing the VXX ETF (derived from the VIX) on the daily chart, below, it is tough to say we have seen adequate fear on this market sell-off to the point where it is worth "buying the blood" and shopping for longs for anything more than a quick scalp, if at all. The trend is now down in stocks, and therefore the bears get the edge, which means it is more likely than not the VIX train heads north before stocks do. 

The issue then becomes duration--Could it be simply a fearful uptick this afternoon? Or morph into an outright crash? 

We have a few ideas on the radar and trades in play for Members, as we speak, regarding those issues.