Recent market indicators are sounding alarm bells, as volatility in the Russell 2000 relative to the S&P 500 has surged to levels not seen since the Global Financial Crisis and the bursting of the Nasdaq bubble. This development, reminiscent of Minsky’s adage that low volatility begets instability, is a potential red flag for investors.
Additionally, the American Association of Individual Investors (AAII) survey reveals a significant shift in sentiment. The percentage of bullish responses has dropped from 49% to 42.2% in the past week, while bearish sentiment rose from 22.6% to 26.8%. This change in investor sentiment may indicate growing unease about market conditions.
In a notable move, Jeff Bezos, founder of Amazon, has unloaded $4 billion worth of Amazon stock over the past five business days. This significant divestment, the first since 2021, raises questions about Bezos’ outlook on the company and the broader market. Bezos’ actions often draw attention, and his recent stock sale may influence investor perceptions.
As these warning signs emerge, market participants are advised to remain vigilant and consider potential implications for their investment strategies.
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Remember Minsky's adage of low volatility begets instability?
Russell 2000 v S&P 500 volatility has risen to extreme high levels last seen just prior to The Global Financial Crisis and Nasdaq bubble bursting. Something to keep one eye on.
H/T @dailychartbook pic.twitter.com/cnc9NCISLP
— Albert Edwards (@albertedwards99) February 15, 2024
The % of bullish responses AAII responses dropped to 42.2% from 49% over the past week. Bearish sentiment rose to 26.8% from 22.6%. pic.twitter.com/SSojqOvQ5H
— Daily Chartbook (@dailychartbook) February 15, 2024
BREAKING: Jeff Bezos has unloaded $4 billion of Amazon stock in the past 5 business days.
This is his first stock sale since 2021. t.co/CB5EOXmH02
— Financelot (@FinanceLancelot) February 15, 2024