When stocks go up volatility goes down and vice versa. While this historically inverse relationship plays out most of the time, there’s been a significant disconnect as of late.
The chart below illustrates this disconnect. As you can see, over the past three-months, the S&P 500 (black line) has gained around 2.7% yet the S&P 500 volatility (ChicagoOptions:^VIX) (dotted line) has surged almost 37%.
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While Wall Street and the mainstream media is enamored by one all-time high after another in the U.S. stock market (NYSEARCA:DIA), other key investment themes have largely been ignored or forgotten.
If the S&P 500 (SNP:^GSPC) stays the same or edges higher, it’ll mean five consecutive yearly gains and nine gains out of the past 10 years.
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Was the S&P 500 the last proverbial man standing?
Today’s -2.09% clobbering officially wiped out the S&P 500’s (NYSEARCA:IVV) YTD gain. Put another way, three-months of gains were lost in single trading session! (See chart below)
The swift decline doesn’t come as a surprise to our readers,
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