Leaders Become Laggards As Traders Bet On Volatility

This is an abridged version of our Daily Report.

Leaders become laggards

The Nasdaq Composite and Russell 2000 have lost their 50-day averages after months above, a change from June when both were leading the market. Even with the S&P 500 and Dow Industrials above their averages, future returns were muted.

Summer of volatility

The seasonal pattern between the past 5 and 25 years in the VIX shows a bottom right about now in a typical year.

Hedgers seem to be betting on it, holding more than 20% of the open interest, among their larger positions in nearly 15 years.

New highs in high-yield

The number of new 52-week highs among high-yield funds finally exceeded the number of new lows, as noted in a report from July 23.

Tech troubles

The Nasdaq Composite set a 52-week high four days ago and then dropped more than 1% each day since. It has only done that twice before, on March 15, 2000 and January 22, 2010.