Stock Market Volatility Hasn't Really Said Much So Far
Now that the word "volatility" returns to the everyday vocabulary of the media, let's take a moment to remember what the word means. Simply, it means movement - up and/or down. It's not always pleasant, and just as some of us tolerate motion sickness better than others, you may or may not be subject to unpleasant side effects from market volatility. But as in the case of motion sickness, for the most part the unpleasantness doesn't result in any permanent impairment.
And yet volatility can serve as a signal to "watch closely." What to watch? Market averages. In the case of stocks, we typically watch the Dow, the S&P, and from there we might move to the Russell 2000, of some foreign and emerging market indices, depending on how you're invested. For now, let's stick with the basics: the Dow and the S&P. So far, there's nothing in recent action that's provided a clear and present danger signal. For example, the Dow hasn't broken below previous lows seen in August, nor has the S&P. Until that happens, we may be feeling nauseous, but that's about it.
So far, a lot of noise, at least when it comes to the the major trend of the market. Now, if you're a trader, you're probably drilling down more than this, so you may (probably have) hit some levels that caused you to put on or take off trades. For the rest of us, the only movement that should have caught our attention and possibly called for action might be the Russell 2000 which has collapsed below previous support and looks pretty ugly.
While we're not saying a bear market in stocks isn't in the making, going by the action to date, there's not enough evidence to come to any conclusions. So we watch - closely.
And yet volatility can serve as a signal to "watch closely." What to watch? Market averages. In the case of stocks, we typically watch the Dow, the S&P, and from there we might move to the Russell 2000, of some foreign and emerging market indices, depending on how you're invested. For now, let's stick with the basics: the Dow and the S&P. So far, there's nothing in recent action that's provided a clear and present danger signal. For example, the Dow hasn't broken below previous lows seen in August, nor has the S&P. Until that happens, we may be feeling nauseous, but that's about it.
So far, a lot of noise, at least when it comes to the the major trend of the market. Now, if you're a trader, you're probably drilling down more than this, so you may (probably have) hit some levels that caused you to put on or take off trades. For the rest of us, the only movement that should have caught our attention and possibly called for action might be the Russell 2000 which has collapsed below previous support and looks pretty ugly.
While we're not saying a bear market in stocks isn't in the making, going by the action to date, there's not enough evidence to come to any conclusions. So we watch - closely.
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