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Markets looked very calm this summer. While there was some turmoil in August, the recent character of the VIX has been one of placidity, at least on the surface. Bloomberg argues that underneath than serene veneer, there is a lot of churning and tension in stocks. "Nervousness is going up. The dysfunction in the White House has gotten worse, the situation in North Korea has deteriorated, even though the economic data is looking good" says one CIO. The relationship between stock sectors is diverging, which helps to explain why the benchmark is not moving. One sector or stock might move wildly higher, but another will move sharply lower, offsetting each other.
FINSUM : There is much more volatility than you would see if you only looked at the headline index number. That said, growing sector divergence is not necessarily a bad thing; at least no one can accuse investors of "complacency".
- stocks
- vix
- divergence
- correlation
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
