Silver Rises Over 120% YTD 
The S&P 500 is having its worst month since September 2023, and Jim Paulsen has identified a concerning signal: S&P 500 stocks are moving independently of each other at levels not seen in 25 years. This “low correlation” environment typically occurs when market breadth narrows (few stocks leading the market), during monetary tightening, and often as bull markets mature.
Historical data shows this pattern has preceded trouble – six of eight bear markets since 1980 started when correlation was below average, as it is today. When stocks have been this disconnected (bottom quartile of correlation), future S&P 500 returns averaged just 6.04% annually, compared to 16.86% when correlation was high. This disconnect suggests investors may be overly optimistic despite recent market concerns about tariffs and AI stock valuations. The combination of low correlation, Fed tightening, negative money supply growth, and an inverted yield curve creates a potentially vulnerable market environment.
