The market is grappling with a historic breadth problem, as evidenced by the S&P 500's ninth consecutive day of negative breadth, a phenomenon not seen since the late 1990s. Despite a positive report from Broadcom that sparked a rally in equity futures, the broader market remains under pressure. The divergence between the S&P 500 and the equal-weighted SPW index, which has declined 2.62% this month compared to the S&P's modest 0.31% gain, underscores the uneven market performance. Implied volatility remains low, reflecting market confidence and the impact of dealer activities, such as being long gamma, which helps suppress large market movements. However, the steep contango in the VIX curve suggests that the market is bracing for potential volatility spikes, especially with upcoming events like next week's Fed announcement.
The ProShares Trust Ultra VIX Short Term Futures ETF (UVXY) experienced a decline, dropping 2.36% to $18.63 as of 07:40 AM on Friday, December 13.