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Equities

Elevated VIX Signals Caution Despite Tech Leadership Continuing

Issue 6Week ending March 22, 202610 sources

S&P 5006,606.49+1.2%
S&P/TSX24,850.30+0.8%
Nasdaq22,090.69+1.8%
Russell 20002,445.80-0.3%
VIX24.06+2.1pts
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Week Ending March 22, 2026

Elevated VIX Signals Caution Despite Tech Leadership Continuing

§ 01

Key takeaways

Sectors

Tech continued leadership with NASDAQ +1.8% but small-cap underperformance signals selective risk appetite amid macro uncertainty.

Style

Growth outpaced value by 150bp as mega-cap earnings momentum sustains factor leadership despite elevated volatility environment.

Hedging

VIX spike to 24.06 demands tactical protection as put/call ratios hit 1.2x and institutional flows favor defensive positioning.

§ 02

Executive summary

Equity markets posted mixed results with tech-heavy NASDAQ gaining 1.8% while small-caps declined 0.3%, reflecting selective risk appetite. VIX surge to 24.06 signals elevated uncertainty despite S&P 500's 1.2% weekly gain. Growth factor maintained leadership over value by 150bp margin as mega-cap earnings momentum persists.

§ 03

Market data

weekly snapshot

QMR MARKET BRIEF

Market posture

Week ending

Overall postureConstructive

Sectors Neutral · Style Growth · Hedging Overweight

Snapshot compiled Mar 20, 2026 · source dates vary

SectorsNeutral
StyleGrowth
HedgingOverweight

Inputs used

S&P 5006,606.49+1.2% 1W
TSX24,850.3+0.8% 1W
Nasdaq22,090.69+1.8% 1W
Russell 20002,445.8-0.3% 1W
VIX24.06+2.1 pts 1W
§ 04

Sectors

15 points

Cyclical

  • Financials pressure Banks -1.4% WoW on yield curve flattening concerns — RBC sees 'NIM headwinds if curve inverts again' (RBC Capital Markets, Mar 2026)
  • Energy resilience TSX Energy +2.1% as WTI holds $78; Scotiabank upgrades Canadian E&Ps citing '18% FCF yields at current strip pricing'
  • Industrials mixed Sector flat despite infrastructure spending tailwinds; TD Securities sees 'margin pressure from wage inflation offsetting volume growth'
  • TSX cyclicals Materials led at +1.9% on copper strength; BMO highlights 'base metals supercycle intact despite China growth concerns'
  • Positioning Neutral cyclicals given mixed signals — energy overweight but financials face headwinds (Goldman Sachs Mar 2026)

Defensive

  • Utilities leadership XLU +1.8% as 10Y yields stabilized; Wellington Management sees 'dividend yield premium attractive at 4.2% vs 10Y at 3.8%'
  • Healthcare steady Sector +0.5% with defensive bid intact; Fidelity notes 'biotech valuations compelling after 2025 correction'
  • Consumer Staples XLP +1.2% on flight-to-quality; Capital Group emphasizes 'pricing power durability in inflationary environment'
  • REITs outperform Canadian REITs +2.3% led by residential; National Bank sees 'supply shortage supporting rent growth trajectory'
  • Signal Defensive leadership suggests risk-off undertone despite headline equity gains

Technology

  • Magnificent 7 Average +2.4% with NVDA leading at +4.1% on AI chip demand; Morgan Stanley maintains 'secular growth story intact'
  • AI narrative Microsoft Azure growth accelerating; UBS raises target on 'enterprise AI adoption inflection point'
  • Valuation Tech forward P/E at 26.8x vs 5Y average of 24.1x — premium justified by earnings growth (J.P. Morgan Mar 2026)
  • Earnings momentum Q1 tech earnings revisions +3.2% vs S&P 500 flat; BofA sees 'earnings acceleration continuing through 2026'
  • Positioning Overweight tech maintained despite concentration risk — secular trends outweigh cyclical concerns (BlackRock Investment Institute)
§ 05

Style

10 points

Growth vs value

  • Relative performance Growth outpaced value by 150bp as IWF +1.9% vs IWD +0.4% — widest weekly spread since January 2026
  • Valuation spread Growth P/E premium at 8.2x vs 5Y average of 6.8x — elevated but earnings growth differential supports (Vanguard Mar 2026)
  • Earnings differential Growth cohort EPS growth forecast 22% vs value 8% for 2026 — justifying multiple expansion (FactSet)
  • Canadian context TSX growth stocks +1.6% vs value +0.2% as Shopify, Constellation Software led — unusual for value-heavy index
  • Institutional calls 68% of strategists favor growth over value for H1 2026 — highest since 2021 (Goldman Sachs survey)

Size & quality

  • Large vs small Russell 1000 +1.4% vs Russell 2000 -0.3% — 170bp gap widest since Fed pivot concerns emerged
  • Quality factor Low-leverage, high-ROE stocks +2.1% as credit concerns favor balance sheet strength (MSCI Quality Index)
  • Small cap risk Russell 2000 earnings yield gap to 10Y Treasury narrowed to 1.8% — credit risk premium compressed (Research Affiliates)
  • Canadian context S&P/TSX Completion Index -0.8% vs TSX 60 +1.1% — similar small-cap underperformance pattern
  • Positioning Overweight large-cap quality given macro uncertainty — small-cap value trap persists (T. Rowe Price Mar 2026)
§ 06

Hedging

10 points

Volatility

  • VIX regime At 24.06, firmly in elevated territory (>20) after 2.1pt weekly spike — highest since December 2025 crisis
  • Term structure VIX curve in mild backwardation with 1M/3M spread at -0.8 — suggests near-term stress but not panic
  • Options positioning CBOE put/call ratio spiked to 1.2x from 0.9x prior week — institutional hedging activity accelerating
  • Protection cost 3M 5% OTM SPX puts at 2.1% of notional vs 1.4% last month — hedging expensive but justified
  • Institutional view 'Volatility regime shift warrants tactical protection despite equity momentum' (Bridgewater Associates Mar 2026)

Tactical

  • Cash allocation Raise to 8-10% from 5% given VIX >24 — deploy on weakness below S&P 6500 (Wellington Management)
  • Collar strategies Implement 5% OTM collars on concentrated tech positions — upside participation with downside protection
  • Cross-asset Stock/bond correlation at 0.3, near neutral — bonds providing some diversification benefit returning
  • Tail risk Credit spreads widening with IG OAS at 95bp vs 85bp last week — early warning signal flashing
  • Rebalancing Trim growth overweight by 2% given extended valuations and rising volatility (AQR Capital Management)
§ 07

Institutional views

12 institutions

Institutional Perspectives

RBC Capital Markets

Lori Calvasina

neutral
S&P 500 Target: 6,700
Key Call: Cautious on financials amid yield curve concerns, overweight Canadian energy

Goldman Sachs

David Kostin

bullish
S&P 500 Target: 6,900
Key Call: Tech leadership sustainable, maintain growth overweight despite volatility

Morgan Stanley

Mike Wilson

neutral
S&P 500 Target: 6,500
Key Call: VIX spike validates defensive positioning, prefer quality over momentum

TD Securities

Andrew Kelvin

bearish
S&P 500 Target: 6,200
Key Call: Elevated volatility precedes correction, reduce equity overweight

BlackRock Investment Institute

Wei Li

bullish
S&P 500 Target: 6,800
Key Call: AI earnings cycle intact, tactical volatility creates entry points

BMO Capital Markets

Brian Belski

bullish
S&P 500 Target: 6,850
Key Call: Base metals supercycle supports TSX Materials, US large-cap quality preferred

J.P. Morgan

Marko Kolanovic

neutral
S&P 500 Target: 6,600
Key Call: Tech valuations stretched but earnings growth justifies premium

Bank of America

Savita Subramanian

bullish
S&P 500 Target: 6,750
Key Call: Growth factor leadership to continue, small-cap headwinds persist

Scotiabank

Hugo Ste-Marie

neutral
S&P 500 Target: 6,550
Key Call: Canadian energy attractive on FCF yields, defensive positioning warranted

Wellington Management

Portfolio Strategy Team

neutral
S&P 500 Target: 6,650
Key Call: Utility dividend yields attractive, raise cash allocation to 8-10%

National Bank Financial

Martin Roberge

bullish
S&P 500 Target: 6,775
Key Call: Canadian REITs outperform on supply shortage, TSX defensive leadership

UBS

Keith Parker

bullish
S&P 500 Target: 6,825
Key Call: Enterprise AI adoption accelerating, Microsoft target raised
§ 08

Portfolio implications

Portfolio Implications

Conservative

  • Sector tilt: 40% defensives (utilities, healthcare, staples) given VIX >24 environment
  • Factor: Quality and low-volatility emphasis, avoid small-cap value trap
  • Hedging: 3M put spreads at 5% OTM, raise cash to 10% allocation
  • Canadian: 35% TSX allocation, overweight REITs and utilities for yield

Balanced

  • Sector tilt: Neutral cyclical exposure but prefer energy over financials
  • Factor: 60/40 large-cap growth/value split, quality tilt maintained
  • Hedging: Collar strategies on tech concentration, 8% cash buffer
  • Canadian: Standard 25% home bias, currency hedge 50% of US exposure

Growth

  • Sector tilt: Maintain tech overweight despite volatility, selective cyclical exposure
  • Factor: 70% growth allocation, momentum names within large-cap universe
  • Hedging: Tactical puts on 20% of equity exposure, maintain full investment
  • Canadian: 20% TSX weight, focus on growth names like Shopify, Constellation
§ 09

Key dates

5 events

Key Dates Ahead

DateEventRelevance
March 24NVIDIA Q4 earningsAI narrative catalyst, tech sector leadership
March 26Core PCE inflation dataFed policy implications, rate-sensitive sectors
March 27Bank of Canada rate decisionCAD impact, TSX financials and REITs
March 28Q4 GDP final readingGrowth trajectory confirmation, cyclical sectors
March 31Quarter-end rebalancingIndex flows, factor rotation potential
§ 10

Sources

10 sources

Sources & References