Don here...
The VIX almost hit 22 today. The last time it was there, the S&P 500 was trading at 6750. Today it's at 6840.
Volatility is pricing in risk that the index hasn't acknowledged yet. That disconnect is the single most important signal in the market right now.
The S&P 500 has been trapped in a 250-point range for most of 2026. Every high and every low this year fits inside a box from 6775 to 7000 on a $7,000 product. The advance-decline line is stuck at 50/50. It's pure rotation with no conviction.
But underneath that range, the cracks are spreading fast.
Capital is flooding into risk-off assets. The TLT cracked the upper edge of its expected move in a massive way this week. Gold is approaching highs again. Silver is back on the bid. The VVIX is sitting at 110, which is the level where things start getting genuinely dangerous.
The rotation into defensive sectors tells the real story. XLP is about to break out. Investors are piling into consumer staples and utilities while dumping Microsoft, Meta, and Google. XLU carries a 0.24 beta and it's exploding higher. A low-beta product moving like that only happens when institutional money is running scared.
Here is what I broke down in tonight's video:
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The VIX is printing near 22-23 with the S&P 500 a full 100 points above its February lows, signaling that volatility is detecting new risks the index hasn't priced in yet
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Regional banks are getting killed and private credit rumblings are growing, with real financial sector pressure building beneath the surface
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Microsoft broke under 400 this week, Google looks likely to test 300, and Nvidia's earnings failed to save the broader market
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Block (formerly Square) laid off half its company because of AI, and the stock popped, raising the question of who exactly is going to spend all that money on AI products
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Next week's expected move is $144 and there's roughly an 85% chance we touch the upper or lower edge, meaning real volatility is coming after two unusually quiet weeks
The S&P 500 is holding together by forcing capital into places like toilet paper stocks and utility ETFs. That is not healthy leadership. That is a market going to the mattresses.
Click here to watch me break down every risk signal and what I'm trading into next week
To your success,
Don Kaufman
Chief Market Strategist, TheoTRADE
Chief Market Strategist, TheoTRADE
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