Don Kuafuman here.
The S&P ripped nearly 50 handles today, and everyone’s screaming “unprecedented rally!”
But hold on – we literally just hit the upper edge of our expected move. This wasn’t some miracle comeback. It was exactly what the math predicted.
But here’s what has me concerned…
We just witnessed something I’ve never seen in my decades of trading. Apple moved 4.6 standard deviations beyond its expected range this week.
That’s mathematically “impossible” – until you see it happen.
Apple started the week around 202, with an expected move of about $6. Where did it close? Try 230. That’s a 28-point move when it should’ve been 6.
This isn’t just impressive. It’s terrifying.
Here’s why: We’ve now had THREE consecutive weeks where the market breached its expected move.
Three weeks where the marketplace “got it wrong.” Yet next week? We’re looking at just an $88 expected move.
Folks, I’ve seen individual trading sessions this week with ranges bigger than $88.
But the real story isn’t just volatility – it’s concentration risk that’s hit critical mass.
The top 10 stocks now represent over 41% of the entire S&P 500’s $57 trillion market cap.
Eight of those 10 are tech stocks with heavy correlations. We’re talking about $23+ trillion concentrated in essentially the same trade.
Think about that: The S&P 500 – designed for diversification – now has single stock risk.
If NVIDIA (sitting at $4.4 trillion) got cut in half overnight, what would your “diversified” portfolio look like?
We’ve completely lost what the S&P was supposed to provide.
This is 1999-2000 concentration levels, but condensed into 8-10 names instead of spread across an entire sector.
I’m calling this trading “on the edge of sanity” because that’s exactly where we are.
The echoes of volatility from last week’s 111-point selloff are still reverberating. Every sell-off gets bought immediately, creating these violent, disconnected moves that feel more like algorithmic warfare than normal trading.
And with next week’s laughably low $88 expected move? I’m taking the over all day long.
To get my full take, watch the weekend video update.
Keep your hands and feet inside the vehicle,
Don
