Just How Boring Have Things Been? (Part 1)

A funny thing happened after the third-largest rally, since 1900, for the Dow from the U.S. election until year-end (+7.8%)—it is now in the midst of the smallest monthly range ever. That’s right, with the Dow flirting with the big 20,000 level, it has simply stopped moving, up or down, and the daily ranges have been historically small.

 
Going clear back to 1900, using closing prices, the Dow has traded in a range of only 1.07% over the past month (21 trading days), for the smallest monthly range ever in history. The bottom line is tight ranges don’t stay that way forever, and higher volatility sometime later this year is very likely.

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Let’s consider another way to look at this: the intraday high-to-low range over the past month (21 trading days) has come in at an all-time low of only 1.42% over the past month (using intraday highs and lows). Going back to 1970, using reliable intraday data, only the summers of 2014 and 2005 were the other times to even see a range less than 2%.

 
What makes the monthly range so rare for the Dow is it is also happening right near all-time highs. Per Ryan Detrick, Senior Market Strategist, “Incredibly, the Dow has now traded 45 straight days within 1.5% of the all-time high. When you consider the past month has also been the smallest monthly range ever, we have an index that climbed right up to 20,000 and simply froze.”

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Tomorrow, we will take a look at what appear to be some historically “boring” stats for the S&P 500 and what it could mean for equities.

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