Market volatility: The storm before the calm?
Are we in Pamplona or Yellowstone? Are we running with the bulls or fleeing the bears?
Ben Bernanke, of course, is full of bull, whether or not he's just bullshitting. Bloomberg quotes him as saying that the stress-test results on U.S. banks "should provide considerable comfort." That's his spin on the spin — and there's so much spin that you don't know how much of a yarn you're being told.
Maybe we could judge that in a market that's less volatile. And just how volatile is the market right now?
Mark Hulbert's got an interesting take this morning on MarketWatch about how shaky current volatility indicators may be.
The Chicago Board Options Exchange's Volatility Index (VIX) hit its all-time high last October, and these days it's much, much lower. So that means the market's less volatile right now, right?
No, forget the VIX, he says, because that focuses on options and, thus, the future. He's been counting up the number of days when the Dow rises or falls by at least 1 percent. By his crunching:
The comparable number as of last Oct. 24, when the VIX hit its all-time high, was essentially the same -- 44 days. So, at least from this perspective, recent volatility is just as high today as it was last October.
And that's very high indeed. Consider that in all of calendar 2005, there were just 27 days in which the Dow rose or fell by 1% -- about once every 10 trading days, on average. In calendar 2006, there were just 25 such days.
The numbers are even "starker," he says, when you look at the days during which the Dow moved up or down by at least 2 percent. By that measure, the market's currently almost as volatile as it was last October and much more volatile than from 2004 to 2006.
Hulbert's conclusion is that options traders "are less concerned about the stock market today than then -- far less." But that worries him because, based on the actual current volatility, he still contends that what's going on now is a bear rally, not the start of a bull run.
1 comment(s)
This recession is mostly hype. Just look at what kind of scuz had the Presidency for eight years and then ask yourself the question who would benefit by a recession. Of course, those with a ton of money and especially those getting steady Iraq war profiteering checks from the Treasury. They have money, few others do, they can buy up everything cheap, keep labor down and watch the competion go belly up or buy them out. I am convinced that this recession is the last present of Bush to his primarily Texan buddies and that it is largely artificial and that it will take us nothing but confidence in ourselves and our society to turn it around. Running off Republicans from any influential, policy making position will speed up recovery as well.
Posted On: Saturday, May. 9 2009 @ 1:03PM