Friday the 13th

The first of two this year

Wow! Large cap, mid cap, small cap and both flavors of growth and value. These common categories provided nowhere to hide yesterday.

Only three of eleven US sectors finished in the green and seven were down more than 1% on the day.

Headlines shouted that the grim reaper of AI had taken down the transportation sector after a former karaoke company launched an AI logistics tool in a drive-by shooting reminiscent of the DeepSeek announcement last year.

No shock that the VIX Mix took it on the chin. Down 19 points to land at 20%, right on the border of bad and worse. There were no components on the bullish end and 15 of 17 were in one of the red segments of the gauge.

It’s as if the bears show up every time the S&P 500 knocks on the door of 7000. And dip buyers have stepped in every time since we recovered from last year’s Tariff Tantrum.

We posted the chart below just a couple of days ago (Confused - But not dazed). As a reminder, it shows the ratio of VIXM:VIXY as a proxy for bullishness and bearishness in the VIX futures term structure. The third category is “confused.”

After yesterday’s blood bath, the ride edge of the chart is bearish once again. You can see the head fakes back in October and November.

No one has a clue how this move will work out. Markets have been very resilient and bears have been repelled. The VIX Mix is telling us that investors have not allowed themselves to be fully bullish, but hedging has not paid off except for the most nimble of traders. I suspect that some measure of battle fatigue may be setting in. Should this dip turn in to something deeper, we may see a more meaningful correction. Everyone should take minute to decide what kind of response makes sense given individual timeframe and risk tolerance.

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