Post by jeffolie on May 22, 2015 6:21:52 GMT -6
The stock market is calm. Too calm
By Shawn Langlois
Published: May 22, 2015
The S&P just closed at its 10th record high of the year and looks poised for another.
In that regard, the market is almost perfectly tracking last year, when the S&P notched its 11th record close on May 23, the FT pointed out. Of course, from there it went absolutely nuts and ended up taking out 53 records by the time the ball dropped on 2014. Hard to see that happening this year.
In case you haven’t noticed, the steady assault on record highs by the S&P has come amid a market sapped of volatility and volume. For you stat wonks, there hasn’t been a 1% decline from any given intraday high since May 11, according to Georgetown professor Salil Mehta. That’s seven sessions, and it’s not the kind of tight range you see everyday.
In fact, it’s happened only three times in two years.
“This implies an exceptionally, low probability event,” he said, explaining that this kind of volatility streak tends to peter out rather quickly. The prior occurrences generally end after nine days or so. In other words, if history is any indication, things should liven up soon.
This streak is pretty much in keeping with what we’re seeing from the volatility gauge VIX, -5.98% which ended Thursday at 12.11, it’s lowest level of the year. Last July, the VIX hit 10.32, a level not seen since 2007. The lowest close on record is 9.31 from back in 1993, according to FactSet.
So it’s smooth sailing. Calm before the storm?
www.marketwatch.com/story/the-stock-market-is-calm-too-calm-2015-05-22?dist=beforebell