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Editor's Note: Below is an excerpt transcribed from today's edition of The Macro Show hosted by CEO Keith McCullough. Click here to learn more about The Macro Show.

Why We Said There Was A "Huge Selling Opportunity" In The Stock Market - 02.09.2018 some week cartoon

Keith McCullough: Four days ago, I wrote an Early Look titled “Huge Selling Opportunity.” I had never written those three words together, even back in 2008. So I don’t know if people need conviction or hand holding or whatever, but what you really need is a process.

The S&P 500 was near the top end of the Risk Range when I wrote that. It also had gone to an implied volatility discount of -37%.

That’s not the case this morning, with Joey Kernen watching the Dow in points. Implied volatility has come in a bit.

If you look at the Risk Range today, there’s actually more upside than downside. Don’t tell the bulls. If I was working on the Old Wall I might just get on the box and say, “Hey, we’ve got ourselves a buying opportunity here.”

The top end of the Risk Range is 2798 so that’s +2.8%. So the S&P 500 has +2.8% upside versus -2% downside with the low end of the range is 2668.

Again, what did I tell you to do? When the VIX is between 17 to 19, don’t chase the charts. Make sales. The top end of the Risk Range for the VIX is 23.82 so in the 22 to 24 range is where you’d be covering shorts.

I’m just trying to give you a playbook. The math of the Risk Range changes dynamically so I just want to give you a better framework to make decisions.

If you look at yesterday’s selloff, not surprisingly, it came on accelerating volume. So there you have it. You had accelerating volume on a down day. Volume accelerated 6% versus the 1-month average and 21% versus the 3-month average.

Why We Said There Was A "Huge Selling Opportunity" In The Stock Market - volume

McCullough: Plus, six sectors were down on the day. Energy stocks (XLE) led the losers. No, we didn’t want you to be long Energy stocks, down -2.3% on the day. The newly manufactured Communications (XLC) ETF was a terrible place to be. It’s down -3.2% for the month of November. I thought the bear market was over? No, it just started. And Utilities (XLU) is up +2.6% for the month of November getting you paid right there in your wallet.

Why We Said There Was A "Huge Selling Opportunity" In The Stock Market - sector

Why We Said There Was A "Huge Selling Opportunity" In The Stock Market - the macro show