It’s been a while since I haven’t shown the updated CBOE implied correlation index graph.

It is currently in a panicky climaxing freefall, indicating that large hedge funds have definitely turned away from overall market protection (with falling correlation among put premiums/volatility for all stocks). The last rush down suggests that the late hedging bears have now capitulated for good. From a contrarian perspective, it might even raise some concerns.

But this is the ideal environment for stock pickers, especially for momentum, relative strength and CANSLIM-type investors. The low implied correlation reflects the shift in strategy by large funds to concentrate more risks on individual leading stocks and less on ETFs and market indices.
Billy

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