The US stock market is as calm as it can be on the surface, while underneath it is seething more than it has been for decades.
The S&P 500 is so quiet it’s almost unsettling. The index has not experienced a 5% correction on the basis of the closing prices since the end of October; No wonder the new day traders who started buying stocks in lockdown think the market is only going up. The last time the S&P was so calm for so long was 2017, a period of calm that ended with the volatility crash in early 2018 – although it was still much longer then.
Look at the performance of the stock types, however, and they fluctuate a lot more than usual. Investors have switched their bets between industries at a pace not seen outside of crises; March saw the biggest gap between the best and worst performing sectors since 2002.
The link between the movement of growth stocks and cheap “value” stocks is, as measured by correlation, the weakest since 1995; Investors use them as a proxy for betting on or against the economic recovery.
Meanwhile, stocks big and small last moved so independently during the dot-com bubble in 2000, never a comforting sign.