Markets turn calm after hectic year

Typically stocks do well in calm periods and not so well in volatile periods

This year has been unnerving, but things have quietened down. The S&P 500 recently went through a week where no trading day saw the index move 1 per cent or more in either direction – the first time this year this has happened, notes Willie Delwiche of All-Star Charts.

In ordinary times, it’s common for markets to see little movement in a given day or week, but 2022 has been different. The S&P 500 had moved by 1 per cent or more on over half of trading days in 2022, notes Delwiche. Over the last 50 years, the only years that recorded more 1 per cent daily moves were 2008 and 2002 – two very difficult years for stocks.

Typically, there is an inverse relationship between volatility and strength – stocks do well in calm periods and not so well in volatile periods. It’s hard to say if the recent lack of volatility is a pause or the beginning of a new trend, says Delwiche, but either way it’s a “welcome respite in a hectic year”.

Proinsias O'Mahony

Proinsias O'Mahony

Proinsias O’Mahony, a contributor to The Irish Times, writes the weekly Stocktake column