Yes the Market is Volatile – One Day up and One Day Down

We are often surprised when we actually take a moment and look at the real daily market statistics. We know, and have felt for some time, that there has been an escalated level of volatility in the marketplace and on several occasions we have seen the VIX trading at higher levels. However, when you boil the market down to its lowest common denominator the reality is actually apparent.

Consider the following facts. Up to and including yesterday September 8th 2015, we had a 174 trading days in the year. Of those days, 86% of them experienced inter day moves of 100 points or more on the DOW. 82% of those total days experienced moves of 100 points to 400 points. Graphically, we can see that there have been 6 or more (depending on your perception of a spike) spikes of this activity since the beginning of the year.

Source: VIP Wealth Solutions & Bloomberg

On August 24th we experienced an inter day move of 1089 points.

The market is also net negative on the year and is currently posting more negative days than positive days. So far this year we have 91 days that have resulted in negative prints on the DOW at days end and 83 that have finished positive. From a ratio perspective, this accounts to almost one up market day and one down market day.

Source: VIP Wealth Solutions & Bloomberg

The question always comes back, where do we go from here? More recently, the answer has been more of the same. The reality is likely true to this looking forward. There is a laundry list of economic data points that the world seems to take in different perspectives and fold into outcomes that sometimes leave investors scratching their heads. However, perhaps a conversation with an investor yesterday is more relevant to the question of why the market will remain choppy. His posture and the conversation went as follows:

Investor: How’s the market?

Advisor: Choppy.

Investor: Yes I bought some Royal Bank at $72 it went down to $70 and back to $72 and I sold it.

Advisor: Why?

Investor: I just didn’t feel good about the market.

Advisor: Interesting…..

There was no insights to Royal as a company, no fundamental reason for owning or selling, the bottom line is the investor just didn’t feel good about the market?

 

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