The S&P 500 index is up 11% in November alone with one more trading day left. What makes the major index’s performance particularly notable is the fact it is lagging the Dow Jones index that is up 13% and the Nasdaq index that is up 12%, according to The Wall Street Journal.
An unusual rally
The S&P 500’s double-digit percentage gain since the start of November is certainly a welcome sign. The COVID-19 induced selloff in March and April erased years worth of gains and many investors expected another turbulent period amid the U.S. presidential election in early November.
What exactly is the S&P 500 index and the SPDR S&P 500 ETF Trust (NYSE: SPY)? Here is a helpful guide to help you understand.
Meanwhile, the volatility index, also known as the “fear index,” has closed above 20 for 195 consecutive days. This streak hasn’t been seen since the peak of the financial crisis in 2009, according to WSJ.
The divergence between a volatility index above 20 and a bull market is very unusual. In six of the past eight periods when the volatility index traded above 20 for at least 100 sessions, the S&P 500 index had fallen.
What does this mean?
The fact that the markets marched towards all-time highs while the volatility index remains elevated signals investors still have “a lot of scars from what happened earlier in the year,” Chris Murphy, co-head of derivatives strategy at research firm Susquehanna told WSJ.
Other experts are showing the same sentiment.
“There’s so much uncertainty out there,” Stuart Kaiser, head of equity derivatives research at UBS also told WSJ. “Nobody wants to be on
