Meek Sellers

 The selling in US stocks is just not very aggressive.  Monday was the day for the sellers to crack the market wide open and finish near the lows.  Instead, you made an intraday V bottom and rallied all the way to the close, with SPX closing above 3400.

The bears had a golden opportunity yesterday, you had a bunch of stops being hit when SPX went below 3400, and you had the "scary" news backdrop of no stimulus progress and Covid cases rising globally.  And yet the bears kind of blew it, turning a 12 yard gain into an 8 yard gain, still unable to get that first down.  Some would say that's an encouraging session for the bears but I view it as the bear's last great hope before the election and they didn't do enough damage to put fund managers in a tough spot ahead of the election.  

Instead, fund managers are still sitting on good gains and feeling less fearful now, and unlikely to dramatically reduce their current risk levels going into the election after seeing how controlled the selling was.  

You saw heavy put activity in VIX options, which is unusual for such a big down day.  That's how bold these bulls are.  They are quite a cheeky bunch, they will buy VIX puts on dips, something that you didn't see much during past selloffs.  And I do agree, I can't imagine a VIX going much higher from here considering how weak the selling is.  There has been no sustained selling pressure despite being in a 3 week downtrend.  That is not typical, and it is a sign of strength for the SPX.  

Usually VIX options traders are smart money compared to equity options traders.  And VIX put option volume has overwhelmed call option volume over the past month.  

I did close some of my short position yesterday, and will close the rest of it today on any morning dips.  I am almost done with the short side till at least a few weeks after the election.   I will be leaning long starting from tomorrow.