Running Those Buy Programs Into the Ground

A thrust lower at the open on the major indices saw the S&P 500 almost tag the big, round 3,800 level precisely, as well as the QQQ ETF lingering near key $260 support. 

Right on cue, however, we saw a slew of buy programs in some large names, particularly AAPL. 

This was a common feature of the QE/ZIRP bull market era, where buy programs would attack early weakness and spike stocks higher, eventually bringing in more buyers and setting off a nasty squeeze to new highs in most stocks and indices more often than not. 

Since this bear market began, however, that strategy has slowly been losing steam via diminishing upside returns. That said, we have not seen the buy programs capitulate yet or anything close to it. I recognize that it seems like it will never happen. And plenty of "this time is different, the world has changed" arguments are circulating that says we will never get to broad-based capitulation in this bear market based on passive flows, algos, technology, etc.. 

But history vehemently disagrees with these new age arguments. In fact, I take the other side--That the algos will eventually cut both ways and accelerate the violence of the downside when we eventually reach that phase of the bear. 

In the meantime, I am keeping the above levels in mind and keying off whether dip-buyers in not only AAPL but also ARKK IGV fail. 

Finally, the BBBY bankruptcy warning should be taken very seriously and is essentially the nail in the coffin to the "meme stonk" era, another feature of QE/ZIRP which are long gone. As we noted yesterday, even WallStreetBets has moved on and they are making plans to attack longs via buying puts.