The U.S. market has moved from reversal-based shorting to momentum-driven strategies, increasing volatility and making markets more sensitive to speculation. Implied volatility is at a three-month high, and the dollar has weakened amid macro uncertainty. Investors should reassess traditional models, as past performance may no longer predict future outcomes.

The US market has recently shifted. Historically, the SPYs followed a reversal strategy—shorting as the market rose and covering shorts as it fell. This brought stability and reduced volatility.

Today, the market has adopted a momentum strategy, shorting as it drops. This increases volatility, giving rumors more power.

Markets dislike uncertainty and prefer predictable, countable data.

Implied volatility (VIX) is at a 3-month high, surpassing even the election period, with short-term realized volatility also spiking.

Markets do not like uncertainty and like data that can be counted on.

The dollar has dropped sharply, yet investors have paradoxically shorted the Euro as well. The dollar reflects how the world perceives us.

The Current Market Landscape

We are in a new market environment with higher implied and realized volatility, shorting on the way down, and a weaker currency. These are signs of an economy in distress, but the duration and outcome remain uncertain.

Investors should understand that past performance may no longer be a reliable indicator in this environment.

S3 can provide the tools investors need to manage risk and navigate this evolving landscape.

Momentum-driven shorting, heightened volatility, and macroeconomic uncertainty define today’s markets. As implied volatility spikes and the dollar weakens, investors must adapt to this evolving landscape. Traditional indicators may no longer offer reliable guidance, making data-driven insights and real-time analytics essential for navigating risk in the months ahead.

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The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC (“S3 Partners”) to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks, and merits, as well as the legal, tax, accounting, and investment consequences, of such decisions.