Short-Volatility Funds Are Being Flooded With Cash



Troublesome Breadth Statistics:
On Friday, the S&P 500, Dow Industrials and NASDAQ Composite all closed at record highs. Yet the majority of stocks on both the NYSE and NASDAQ exchanges declined on the day. That’s the third time in the past month that breadth has been negative while the major indexes traded at new highs—a cluster only seen once before, in 1999. And, it’s the exact opposite of the kind of breadth readings seen during the 2010-2013 phase of the bull market, when there were clusters of days with overwhelmingly positive breadth.

LizAnnSonders; S.V.P. & C.I.S of Charles Shwab
 
When this historical rally reverses it won't take much to see volatility spike to extreme levels extremely quick...a 2-3% pull back could easily spike the vix 30-40% in days!!!!
 
Troublesome Breadth Statistics:
On Friday, the S&P 500, Dow Industrials and NASDAQ Composite all closed at record highs. Yet the majority of stocks on both the NYSE and NASDAQ exchanges declined on the day. That’s the third time in the past month that breadth has been negative while the major indexes traded at new highs—a cluster only seen once before, in 1999. And, it’s the exact opposite of the kind of breadth readings seen during the 2010-2013 phase of the bull market, when there were clusters of days with overwhelmingly positive breadth.

LizAnnSonders; S.V.P. & C.I.S of Charles Shwab

Recall back in the tech bubble....

John Bollinger was on TV highlighting the divergence in "tech vs breadth". That is, tech soaring while the A/D worked lower and lower. It was an indication "everybody's selling everything else and piling into tech". He rationalized how "bullish" that was. Pfffft! Listening to him, I recall thinking "that's really stupid".

Just a reminder...
 
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"Your personal Groundhog Day , AJ? "

Every big sell off I've been through has come off - what was in hindsight - a volatility low. Plus Andie MacDowell has aged better than I have.
 
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