If you’re watching the S&P 500, you’d better understand this: not all of its ETFs are created equal.
We always talk SPY. That’s the cap-weighted beast driven by the same seven mega-monsters: Nvidia (NVDA), Apple (AAPL), Microsoft (MSFT), etc. If one of them moves just a little, it can have a bigger impact on the S&P 500 and SPY.
There’s another player here, though.
Enter RSP. Same S&P 500, but equal-weighted. Apple and American Airlines (AAL), the smallest market-cap on the S&P, can have the same impact.
Normally, SPY and RSP move in sync. Not today. Right now? We’re seeing a critical correlation break. RSP is lagging SPY. That’s “shots fired.” That’s a warning that volatility is probably going to spike.
Historically, this kind of divergence hits right before the market shakes the tree. Hard.
So if you’re sitting comfy in long positions, thinking this summer lull is gonna last… don’t.
This tape is probably about to get mean. And fast.
Let me walk you through the setup… and how we trade the chaos before it hits…
