Volatility stays low while positioning gets crowded, an old and awkward combination
Implied volatility sits near multi-year lows. Net speculative positioning sits near multi-year highs. Both cannot stay there indefinitely.
The VIX closed below 13 for the fifth consecutive session, a run last seen before the pandemic. At the same time, net speculative long positioning in equity index futures is in the top decile of its ten-year range.
Low volatility and crowded positioning are individually unremarkable. Together they describe a market where a great deal of money is on one side and very little is being paid to insure against being wrong.
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