Volatility Pulse - Hardware is Eating the World

The Great Divergence

Over the last 100 trading days, Semis outperformed Software by 56 points—an all-time high and almost 5 standard deviations above the long-run average. Marc Andreessen said "software is eating the world"—now it's hardware's turn.

Source: @DataTrekMB 

Time for a Bounce?

Software sector $IGV is extremely oversold with RSI below 20. This level has been seen only four other times since 2001. Every other time, the ETF was higher 3 and 6 months later, with average gains exceeding 20%.

 
Source: @Bluekurtic 

Rebalance

Staples gained more than 1.5% while Tech fell more than 2%—the second time that's happened in 3 trading sessions. Outside of Q1'25, the only other times we've seen this was during the early 2000s rotation...

 
Source: @SubuTrade 

Sweet Karma

Telecom ETF $IYZ is pushing to fresh 24-year highs. Many telecoms (especially Europeans) never fully recovered from the fiber optics bubble bust. They're finally showing signs of life—two decades later.

 
Source: @nullcharts 

Silver's Black Friday

Silver plunged 30% on January 30th—the worst single-day drop since the Hunt Brothers tried to corner the market in 1980. After touching a record $120/oz earlier in the session, it cratered to $75. When the CME hiked margins to 15%, leveraged speculators got flushed out in spectacular fashion.

 
Source: Financial Times 

When High Volatility Still Isn't High Enough

Silver options volatility was high last week—but still wasn't high enough to account for this move...

 
Source: Bloomberg 

HODL

44% of Bitcoin supply is now underwater. Funding rates have turned negative, falling to their lowest level since the August 2024 yen carry trade unwind. The believers are getting tested.

 
Source: @seanrose15 

Diamond Hands Have Won So Far

This weekend was the 10th biggest crypto liquidation event on record. But here's the contrarian angle: in 6 of 7 prior cases, total crypto market cap was materially higher 6 months later. Forced selling often marks bottoms.

 
Source: @JeremyDSchwartz 

Dollar's Worst Month Since June

The DXY fell 2% in January—its worst monthly performance since June—weighed down by the "sell America" trade. The dollar touched a 4-year low before Treasury Secretary Bessent reaffirmed the "strong dollar" policy. Still trading 15-18% above long-term averages.

 
Source: Robin Brooks / Substack 

ETFs Continue to Roll

ETF inflows hit $121 billion in January—shattering the prior record of $88 billion. VOO led the pack as usual. At this pace, 2026 would see $1.8 trillion in flows. The passive machine keeps rolling.

 
Source: @EricBalchunas 

Large Caps Win 5 Years Straight

US Large Caps outperformed Small Caps by 5% in 2025—their 5th consecutive year of outperformance. That ties the 1994-1998 record. What happened next? Six straight years of Small Cap outperformance (1999-2004).

 
Source: CFA Institute 

Is the Time Finally for Value?

The strongest sign of market broadening since 2021: Value stocks are now becoming the momentum trade. This may be a classic signal of cyclical macro broadening. The leadership is shifting.

 
Source: @MichaelKantro 

Dispersion Is Back!

A look under the hood of which sectors drove the January returns for SPX. Interesting mix.

 
Source: Citadel Securities 

Just Because...

George Washington never knew dinosaurs existed. Washington died in 1799, a full 43 years before the word "dinosaur" was even invented. The first US President went his whole life without knowing T-Rex ever walked the Earth.

 
Source: Snopes 

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