Spot Up Vol Up Breadth Breaking

The market is experiencing a narrow 'melt-up' where SPX gains are driven by a few AI names while broader breadth fails and volatility rises alongside prices.

Key Takeaways

• 1.Market breadth is narrowing dangerously, with mega-cap AI and momentum names masking underlying weakness where large parts of the market look recessionary.
• 2.A rare 'spot up, vol up' regime is in place, with the Nasdaq 100 moving in tandem with volatility for a record six straight sessions.
• 3.Implied correlation in the SPX has collapsed to record lows, a signal that has historically preceded periods where volatility spreads from single stocks to the broader index.

Table of Contents

• Dangerous Breadth
• Under the hood
• Of the three positive times
• These setups rarely age well
• Extreme
• We have seen this before
• Up vs down
• Spot up, vol up
• 1997

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