The stock market has gone to sleep.
Talk to any trading pro, and they'll tell you how there just isn't much action in the market these days. As we showed you last week, investors and traders were lulled to sleep over the Christmas break... and Wall Street's "fear gauge," the VIX, is at its lowest point in 19 months. We offer another example of how quiet things are today...
Today's chart of the past year's trading in the benchmark S&P 500 stock index features an extra "pane" on the bottom. This pane displays an indicator called Average True Range (ATR).
Put simply, ATR shows how much the stock market is "wiggling" up and down in a given period. When the market is volatile, ATR readings rise. When the market is calm, ATR readings shrink. Notice how ATR was at elevated levels during the wild credit crisis days last year. The past six months of steady market gains, however, have left ATR at its lowest level in over two years.
If the market were an ocean, this low ATR reading is the equivalent of flat seas and not a cloud in the sky. It's a graphic display of what traders call "no action." But as we learned last year, the market has a way of providing action when most folks least expect it.
Talk to any trading pro, and they'll tell you how there just isn't much action in the market these days. As we showed you last week, investors and traders were lulled to sleep over the Christmas break... and Wall Street's "fear gauge," the VIX, is at its lowest point in 19 months. We offer another example of how quiet things are today...
Today's chart of the past year's trading in the benchmark S&P 500 stock index features an extra "pane" on the bottom. This pane displays an indicator called Average True Range (ATR).
Put simply, ATR shows how much the stock market is "wiggling" up and down in a given period. When the market is volatile, ATR readings rise. When the market is calm, ATR readings shrink. Notice how ATR was at elevated levels during the wild credit crisis days last year. The past six months of steady market gains, however, have left ATR at its lowest level in over two years.
If the market were an ocean, this low ATR reading is the equivalent of flat seas and not a cloud in the sky. It's a graphic display of what traders call "no action." But as we learned last year, the market has a way of providing action when most folks least expect it.
No comments:
Post a Comment