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”.