Forbes – Friday’s market activity was remarkable for one thing: the S&P 500 Index had a less than 1% peak-to-valley trading range throughout the day. In contrast, for the previous 66 consecutive trading days, the U.S. equity market had intra-day swings of greater than 1%. Wow! Talk about volatility. We’ve never seen those kind of wild market ups and downs previously.
We also recently witnessed what some would put on record as the shortest bear market in history. On Tuesday, October 4th, the S&P 500 Index traded at a price that was 20% below its May 2011 peak. 20% down is generally called a “bear market,” albeit technically this term is defined by a closing price, not an intra-day price. What’s lost in this noise is the fact that the S&P 500 Index is actually one of the best-performing global equity markets this year. Anyone who owns mid-cap, small-cap, European or emerging market equities felt the pain of price declines well in excess of 20% prior to October’s rally. A bear market indeed. So what’s the prognosis for global equities following this month’s massive rally? More volatility.
