Leaders Become Laggards As Traders Bet On Volatility
This is an abridged version of our Daily Report.
Leaders become laggards
The Nasdaq Composite and Russell 2000 have lost their 50-day averages after months above, a change from June when both were leading the market. Even with the S&P 500 and Dow Industrials above their averages, future returns were muted.
Summer of volatility
The seasonal pattern between the past 5 and 25 years in the VIX shows a bottom right about now in a typical year.
Hedgers seem to be betting on it, holding more than 20% of the open interest, among their larger positions in nearly 15 years.
New highs in high-yield
The number of new 52-week highs among high-yield funds finally exceeded the number of new lows, as noted in a report from July 23.
Tech troubles
The Nasdaq Composite set a 52-week high four days ago and then dropped more than 1% each day since. It has only done that twice before, on March 15, 2000 and January 22, 2010.
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