Market Update: Navigating Volatility and Losses

It’s been another choppy week in the markets, with the S&P 500 Index falling by -1.90%. The NASDAQ Composite Index suffered an even larger drop, down -2.74%, while the Russell 2000 Index got crushed by -4.55%. Year-to-date, the S&P 500 Index is now down -0.66%, while the NASDAQ Composite Index and Russell 2000 Index have deepened their losses, now at -3.93% and -7.22%, respectively. In Canada, the S&P/TSX Composite Index dropped by -1.81%, giving back more of its year-to-date gains, which now stand at +0.58%. In the small and mid-cap space, the S&P/TSX Smallcap and Midcap Indexes also declined further, down -2.60% and -1.88%, respectively, erasing their 2025 gains, which are now negative at -2.66% and -1.29%. Bonds stabilized over the past week, with the CBOE interest rates for the 5, 10, and 30-year bonds (FVX.I, TNX.I, TYX.I) coming in at -0.52%, +0.38%, and +1.11% respectively. Volatility continued to surge, with the CBOE NASDAQ Volatility (VXN.I) increasing by another 10.57%, and the CBOE SPX Volatility rising by 14.82%. The Bullish Percent readings also took a hit, with the SIA Market Equal Weight Index Bullish Percent (BP) dropping by another -16.86%, and the SIA NASDAQ Equal Weight Index BP declining by -13.01%. However, the SIA S&P/TSX Composite Index BP actually rose by 6.25%, likely due to the performance of precious metals. On a global scale, China stood out again, with the Hong Kong ETF (FLHK) up another 2.97%, while its mainland counterpart (FLCH) gained 1.39%. Other outperforming country ETFs included Germany (FLGR), which rose 5.19%, and France (EWQ), which was up 5.34%.

In a volatile market, many investors are left wondering where to hide. Let’s build on yesterday’s SIA feature video which discussed the SIA sector scopes and how elite SIA practitioners use this important intelligence to quickly and efficiently identify risks and opportunities at a glance. In the attachment, we’ve included the latest SIA sector scope, which provides several key insights. The first critical data we can glean is the sector relative strength information, captured in the bell curve. An experienced SIA practitioner’s eye would naturally be drawn to the green boxes, which indicate that these sectors display the highest SIA relative strength within the powerful SIA Market Sectors Index report.

The sectors in green include bank, coms, leis, INTE, INSU, whol, aero, and tele.

Next, the practitioner’s eye would scan for capital letters, which quickly indicate that the sector is in a column of X's on its sector bullish percent chart. In this example, only two sectors have positive (bullish) bullish percent charts: INTE (Internet) and INSU (Insurance). Therefore, we would naturally move to the SIA sector report for these two sectors and begin digging for individual ideas. Let’s do that now!

In the next attachment, the entire SIA Insurance sector report is displayed where each of the holdings is meticulously compared against each other. SIA subscribers receive a ranked list of all the insurance stocks within the universe, with the top 25% scored as "favored," the next 25% as "neutral," and the bottom 50% as "unfavored."

However, it’s important to put this into perspective. Even the bottom of this list resides within the favored sector of Insurance and may be benefiting from the rising tide, as characterized by the positive bullish percent chart. In other words, even the worst performers in this group are still the "worst of the best," while the top performers are the "best of the best." If the market were a dartboard, SIA's powerful analytics might define this list as the bullseye. When looking at performance, we can see that nearly the entire list, with only a few exceptions, has outperformed the market indexes, especially those in the green and yellow zones. This is relative strength in action and valuable as a real-world example for ideas and strategies. If you’d like to discuss this further, please reach out to your SIA account managers. We can enhance your understanding of this powerful tool and assist you in integrating this best practice into your daily and weekly routines.