Rising hedging demand signals increased stock market volatility ahead

ME News reports that on July 20 (UTC+8), foreign media analysis noted that the momentum of stock market gains is weakening, and optimistic earnings expectations are under close scrutiny—two signs suggesting a volatile summer ahead. As investors face growing concerns, overall bullish sentiment is being challenged, and market volatility is quietly rising. The unwinding of AI-related trades is triggering strong market rotations, while demand for hedging is rapidly increasing. The Nations SkewDex Index, which measures tail risk potential for the S&P 500, has surged to its highest level since April, potentially pushing other volatility indicators higher. Although the VIX remains below 20—far from concerning levels—sharp fluctuations in individual stocks are blurring overall trends. Core AI-related stocks driving momentum trading are experiencing heightened price swings; however, unlike in the first half of this year, the narrative of “rising prices accompanied by increasing volatility” no longer holds. Instead, sharp price declines are now occurring alongside persistently rising volatility. (Jin10) (Source: ODAILY)