End of Day Update:
Stocks bounced back, reclaiming a big chunk of Wednesday’s losses. Volatility remains insane as today’s 35-point intraday surge nearly matches yesterday’s 40-points intraday slide.
While today’s third bounce off of 1,990 revives bull’s confidence, it is hard to feel good about a market that whips around 2% a day. Boring markets are healthy and bullish, but this market is anything but boring.
We are only three-percent from all-time highs, but this volatility shows uneasiness creeping in. The Wall Street Journal reports intraday price ranges have swelled 50% this year as compared to 2014’s more sedate trade. Yet the VIX remains under its 10-year average of 20, showing lower than typical levels of fear. And not only is the market near all-time highs, we are also trading at premium forward earnings multiples versus historic averages, 17 vs 14.6.
Record stock prices, increasing realized volatility, low implied volatility, and stretched multiples; makes you wonder if smart money is buying or selling here. Okay, I admit that was a rhetorical question because the answer is obvious.