S&P500 sector correlations closed .25, in the 8th percentile of the past 15 years and remarkable given the recent news flow.

Short term we can see in the below chart that correlations have remained in the blue zone, not even surpassing the red we saw in the brief early December drop.

Our final two charts show that volatility  is appropriately priced.  We wouldn’t want to be making any new moves here.  Our most recent analysis from the weekly post on the 29th of December showed a statistical bias for continued upside. As of now, that bias remains in place until more negative newsflow invalidates that thesis.

Let’s see what the rest of the week brings!