The Disconnect in Volatility 🌤️ The Morning Print
Good morning!
There's a clear disconnect in volatility right now.
The VIX remains muted, suggesting there is little fear priced into the market.
At the same time, the latest AAII Bull-Bear spread shows bulls outnumbering bears by the widest margin since January.
Yet beneath the surface, Nasdaq volatility is telling a different story.
In relative terms, the VXN is sitting at multi-year highs relative to the VIX, highlighting that volatility has become increasingly concentrated in the Nasdaq, and more specifically semiconductors.
One of the biggest risk for the market right now is that we still haven't seen a meaningful VIX spike despite the whipsaws we've experienced over the past month.
Positioning is complacent, and that's exactly how sharp unwinds can happen.
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