The Market's Most Bearish Breakout 🌤️ The Morning Print

Good morning! 

Stocks are becoming increasingly correlated, meaning individual names are moving more in sync.

This dynamic typically happens when broad market selling is taking place.

Let's take a look.

Earlier this year, I discussed the possibility that the 1-Month Implied Correlation Index (COR1M) was nearing a peak and could be signaling a bottom for stocks.

Since then, implied correlations have rolled over significantly.

Now, we're seeing them breakout of a short-term base to new 2-month highs.

At the same time, the S&P 500 is breaking down to fresh one-month lows.

As long as COR1M continues to rise, market conditions are likely to remain messy.

Eventually, we will see a large collapse in correlations, and that will be when the next large opportunity presents itself.

Until then, this fresh breakout remains a signal worth respecting.