DIA - SPY: Expect A Volatility Spike

2024-06-28 09:21:36 ET

Summary

• The S&P 500 index continues to reach all-time highs despite skepticism, driven by optimism surrounding AI and subsequent improvements in margins and earnings.
• Despite its exceptional strength of late, I think the S&P 500 index is likely to feel a spike in volatility shortly.
• The S&P 500 index should be at least in a slight correction 10–15 weeks before the actual election day, although it usually rises rapidly after the election day.
• Historical data and the S&P VIX Index suggest the potential for correction or consolidation in US equities very soon.
• I urge investors to be vigilant and not increase their equity exposure, even if this asset class looks strong today.

Introduction

If you've been reading my articles for a while, I think you know that I've been advocating looking at the S&P 500 Index ( SP500 , SPY ) constructively and not buying the index itself in ETF format, but instead focusing on individual names (with a clearer bias towards value). Contrary to my expectations and the expectations of other skeptics regarding the high probability of an imminent SPY correction, the index has continued to update its ATHs as expectations have risen regarding the growth of artificial intelligence and its role in the future of operational efficiency and thus higher margins and corporate profits....

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