The S&P 500 has shown a significant dislocation between its performance and breadth, marking one of the largest divergences in 30 years. Over the past five days, the index has risen despite negative breadth, tying a record streak from April 1999. This unusual behavior indicates underlying market weakness. Additionally, the CBOE 1-month correlation index has dropped to 2017 lows, signaling that while the S&P 500 implied volatility (IV) remains low, single-stock IVs are rising or stable. This divergence suggests that individual stocks are experiencing more movement compared to the relatively stable S&P 500. Sector and stock correlations are also at multi-year lows, highlighting a fragmented market environment. Similar patterns were last seen in the fall of 2017 and the early 2000s. The 1-month implied correlations have hit a new all-time low.
Sector correlations are plunging Stock correlations are at multi-year lows https://t.co/eVcVxuKTLF
new all-time low 1-month implied correlations https://t.co/XHrzgamRLV
πThe CBOE 1-month correlation index just took another leg down, and is matching 2017 lows. This hits new lows when SPX IV drops while single-stock IVs rise or remain stable. This signals single stocks continue lots of movement vs SPX remaining sleepy. https://t.co/JG1cvYvjoj
Bespoke with a superb chart: Looking at the current rolling % of 100-days with S&P 500 price and breadth moving in opposite directions, the only recent example was observed in the fall of 2017, but before that you would need to go back to the early 2000s @bespokeinvest https://t.co/Htt2D49FlC
"Today the S&P 500 managed to rise on negative breadth. It's now been five days in a row where price has gone in one direction and breadth has gone in the other. That ties the record streak from April 1999." https://t.co/xAQbC9Y3xv
S&P 500 performance and breadth just hit one of its biggest dislocations in 30 years This is a sign of underlying weakness in the market https://t.co/DsAoG2SOVo