26Oct10:54 amEST

Selling Spilling Over

One of the more interesting aspects about the current market pullback has been that one can almost feel just how stubbornly bulls have been fighting each and every dip. The valiant attempts to rekindle the glory of buy-the-dip-to-profit-from-V-shaped-rallies-to-fresh-highs of prior pullbacks is now being soundly rebuked by the market, as virtually all of the major averages are printing fresh correction lows this morning after a promising bounce yesterday.

As we discussed, yesterday's bounce was also pronounced in terms of the sense of relief, again, one could almost feel from underwater longs who have had a rather unpleasant October. But in terms of adequately negotiating the question of whether this market has bottomed, the AMZN and GOOGL earnings reactions last night did not do them any favors, nor did the indifferent reaction to GDP this morning after an initial bounce attempt in the futures. 

My only trading position walking into today's action was a VXX long, a rare trade for me as I typically abstain from the VIX products. However, the lack of fear and panic has been a theme I have continually discussed with Members of late, and I felt compelled to put my month where my mouth was for a prospective pop in the VIX, possibly into the 30s. I already scaled some partial profits, but if we do see a true late-day washout into the weekend I suspect the VIX will begin to wake up with vigor in the final hour. 

After all, if bulls have now been unable to make progress for several weeks now, and the AMZN/GOOGL duo let them down when they needed them most, at what point do they simply throw in the towel and acknowledge that, even if no major bear market nor epic crash lurks around the corner, we are at least in a bit more standard correction which will take much longer to heal than the quick-fix V-shape rallies of bullish lore?

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