Momentum stocks are currently experiencing volatility at 4.0 times the level of the S&P 500, a record ratio that signals something unusual is happening beneath the surface of what looks like a functioning market. Nvidia, the AI chipmaker that has essentially become the poster child for momentum investing, sits at the center of this storm.

What the 4.0x ratio actually means

Three-week realized volatility measures how much a basket of stocks has actually moved over the past 15 trading days. Comparing that to the S&P 500’s own three-week volatility gives you a ratio. A ratio of 1.0 would mean momentum stocks are behaving roughly like the broader market. A ratio of 2.0 means they’re twice as jittery.

Momentum…