The Index Is a Mirage

Mid-Week Thoughts

If you only watched the S&P this week, you might say: “a bit soft.”

SPX is down roughly 80bps on the week. If you watched Nasdaq, the story already looks different… NDX is off about 2.6%.

If you watched how the market actually behaved underneath those indices, it felt closer to a drawdown than a routine pullback.

That paradox is the story of February so far: modest index damage, far more stress in the plumbing.

We are amidst a positioning shock.

And as I wrote to subscribers not so long ago, the pain trade is down, the pain trade is semis down/software up and the pain trade is also momentum down.