92% correlation just snapped back (this is bad)

Don Kaufman here.

The market's about to get weird. Here's why..

SKEW hit 160 yesterday…

You can count on one hand how many times it's been there.

Meanwhile, VIX is dead on the floor.

You could put a chalk outline around it. Lowest instance since inauguration.

But volatility futures 26 days out?

Pricing VIX at 17.90. And 54 days out it's basically at 20.

Massive contango.

The future is bright and filled with risk.

Here's what else nobody's talking about:

Friday's volume was Christmas Eve levels.

With 10 minutes to close we were doing 625,000 contracts on the futures.

I had to check - was it a half trading session? That's literally the only time we see this pathetic volume.

So what's driving this rally?

We're buying crap.

Utilities smashing expected moves.
Home builders with interest rates where they are. Industrials nobody wanted to touch.
Healthcare exploding to the upside when you'd think RFK would kill it.
Materials that nobody's even heard of.

And here's the scary part - the correlation between equal weight S&P and market cap weighted just snapped back to 92%.

Everyone thinks that's good news.

Wrong.

It means technology has completely stalled.

The equal weight had a huge breach of expected move while regular S&P barely gripped the upside.

When everything's equally weighted, it's crushing the market. When it's cap weighted like normal? Barely moving.

You're on the clock right now.

Here's my full weekend breakdown of what you're missing

Get ready for some more volatility.

To your success,

Don Kaufman

P.S. How am I trading this crap? I'm trading earnings for overnight gains of 176% in TSLA, 135% in GOOGL, and 206% in NEM. And next offers more fireworks. Here's the strategy I'm using.

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92% correlation just snapped back (this is bad)

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