Downside Fragility Just Exploded

Downside Fragility

The AI melt-up is becoming increasingly fragile. Momentum, leverage, upside chasing, and mechanical rebalance flows have all reached historically extreme levels at the same time that downside protection is getting abandoned.

The problem with vertical spot-up, vol-up regimes is that once momentum finally starts reversing, downside moves can quickly become far more violent than investors expect.