Geoffrey Morgan
3 min read
(Bloomberg) — Forget the VIX at 18. The stock market is swinging around in ways that are beyond what’s seen as normal in bull markets.
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The broader S&P 500 Index looks steady in recent weeks because individual moves in its constituents — however big — largely cancel each other out. Things are different on a sector level, where capital is shifting from one industry to the next at a lightning speed.
So far in 2026, there have been eight cases when the weekly gap between the S&P 500’s best- and worst-performing groups reached double-digit percentages. The three other instances this century when that happened by this point in the year were in 2000, 2001 and 2009 — all ignominious periods for the market, data compiled by Sevens Report show.
“Such broad weekly sector performance divergences should be viewed as a measurable market warning signal,” said Tyler Richey, with the Sevens Report Technicals. Prior instances are “all associated with periods of elevated broad market volatility, lasting market tops beginning to be established.”
The turbulence beneath the placid surface of the S&P 500 is setting off alarm bells at BTIG LLC and the Sevens Report, who see the action less as a healthy rotation and more as a sign of a market due for a pullback.
“I would classify a rotation as fundamentally driven — there’s a fundamental reason for people to sell one cohort of stocks and buy another — as opposed to a positioning unwind,” Jonathan Krinsky, chief market technician at BTIG LLC, said by phone. The drifting market action in recent weeks is “more of an unwind than a rotation.”
US stocks are on track to post a record number of days this year when the S&P 500 moves in one direction but a measure of its breadth — advancing stocks outnumbering declining — goes in the opposite direction, Krinsky wrote in a note last week.
Four of the eight cases of double-digit weekly gaps between the S&P 500’s best-and worst-performing groups have happened since late May. The overall index hasn’t done much since then, as investors assessed conflicting headlines about the war in Iran, the future of the AI trade and the latest quarterly announcements.
The next few days may bring another stretch of sharp inter-sector swings, as traders brace for Fed Chair Kevin Warsh’s second rate decision on Wednesday as well as the busiest week of second-quarter earnings reports. Mega-cap tech names including Microsoft Corp., Meta Platforms Inc. and Apple Inc. all report between Wednesday and Thursday.
