Let’s Talk Volatility

After the least volatile third quarter for the S&P 500 Index since 1963, volatility has come back in a big way over the past six weeks. One of the big themes from Outlook 2018: Return of the Business Cycle was to expect significantly more volatility this year versus what we saw in 2017.

“Last year we saw the S&P 500 change at least 1% (up or down) only eight times—one of the least volatile years ever. Well, so far this year we’ve seen that number jump up to 50. One thing is for sure, markets don’t stay calm forever, and we are seeing that in 2018,” explained LPL Senior Market Strategist Ryan Detrick.

As our LPL Chart of the Day shows, the average year actually has 50 1% changes— which makes this year maybe not as extreme as some might think. Of course, many of the 1% moves this year have come in bunches, making things seem worse.

50 1 Percentage Changes This Year

So this year feels really volatile, but would you believe it is actually one of the tightest trading ranges we’ve seen in years? Yes, there are still seven weeks to go before the year is over (so this could change), but as of now, the S&P 500 has traded in a range of only 13.6% from the February closing low to the September peak. This is about half the 27% average range for all years going back to 1950.

Surprisingly the S and P 500 Index is in a Very Tight Range this Year


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