The stock market is in the midst of a 10-15% pullback, its worst since March, says one Wall Street expert

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  • Jim Bianco told CNBC on Tuesday that the stock market is in the midst of a 10-15% correction. 
  • The market strategist said catalysts for the correction include a “frenzy of speculative activity in the options market” and the realization that the next stimulus from Congress may never come. 
  • Investors should wait until the market begins to turn to the upside to buy stocks, Bianco added.
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Market strategist Jim Bianco told CNBC on Tuesday that the stock market is in the middle of a 10-15% correction, the worst since March, and it may be too early for investors looking for a discount to dive in.

The Bianco Research president and macro strategist said a “frenzy of speculative activity in the options market” and a recent realization that an additional relief stimulus may not come at all are two catalysts for the sell-off.

Bianco also said that the market is not rebounding as quickly off its lows as it did after the corrections on April 1 and June 11 of this year.

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“We made a lower low Friday, we’re making a lower low today, so this market is showing weakness after the sell-off, something we haven’t seen since March,” he said. “And that’s why I think it’s a little early to maybe jump into the market, and that we probably could expect a bit more of a pullback and a bit more heat around the collar before it’s all over.” 

The strategist said investors should wait until they see signs that the market has turned around, and then “jump in on the upside.”

“Even if you go back to March, if you were four or five days early, you would have lost another 15% of your money before the market rallied back. And then it rallied back only to your breakeven point, so you’d be better off just letting this process unfold over time, and then when it seems like it’s on the back side of it, to jump back in,” Bianco said. “But we’re not on the backside of that yet.” 

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