Upside Fatigue

The tech-led 'AI melt-up' is showing signs of exhaustion as SPX and NDX form reversal candles while Info Tech positioning hits the 100th percentile. This extreme crowding, combined with a record spot-vol correlation and rising rates, suggests an unstable market environment.

Key Takeaways

• 1.The AI-driven market surge is showing signs of exhaustion with reversal candles appearing in major indices like SPX and NDX.
• 2.Information Technology positioning has reached extreme levels, with allocations in the 99th to 100th percentile of five-year highs.
• 3.A record correlation between spot price and upside volatility in the NDX indicates an unstable market structure driven by aggressive upside chasing.

Table of Contents

• Upside Fatigue
• Indecision
• NDX too
• Better than big tech
• Spot up, vol up
• Record levels
• The rates gap
• Skew smoked

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