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Something strange happened this morning.

At 9:30 AM Eastern, when regional banks looked fine, someone dropped massive bearish bets on KRE. 8,000 put contracts bought near the ask. Then another 12,500 contracts on a later expiration.

By market close, KRE had crashed 3.7%.

The timing tells you everything you need to know about who's trading and who's reacting.

This wasn't some retail trader getting nervous. This was institutional money positioning before the charts gave any signal. They knew the selling was coming before price confirmed it.

The prints kept flowing throughout the day. 78,000 XLI put contracts on industrials. 7,500 XLE puts as energy continued bleeding. 10,000 LQD puts on investment-grade bonds.

Here's what makes this dangerous: the SPX chart barely shows the damage.

Brandon pulled up the internals. Advance-decline ratio hit 5 to 1 against the market. The most bearish reading since October 10th. Declining volume versus advancing volume reached 4.65 to 1. Worse than anything we've seen in over a month.

The market is showing classic deterioration under the surface while the headline index masks the rot. When this gap closes, it closes violently.

Everyone's talking about the Santa Claus rally and positioning for a bullish December. Meanwhile, the VIX jumped to 22.5 while dispersion has been screaming warnings for weeks. The components of the S&P 500 have been more volatile than the index itself since mid-October.

Brandon's watching his key volatility signal. The VIX 3M to VIX ratio sits at 1.03 right now. When that drops below 1.0 and VIX pushes above 23, we typically find short-term lows. Translation: we're close to capitulation, but probably not there yet.

One or two more days of selling could flush out the weak hands. Then we get the snapback. That's when this two-way market becomes truly tradeable.

They caught the pop, then caught the drop. This is exactly the kind of environment where the Console gives you an edge on both sides.

The smart money made their move this morning before anyone else saw it coming. By the time CNBC talks about bank weakness tomorrow, the trade will already be crowded.

Video Length: 00:14:26

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