Low volatility has returned to the stock market. What's next


As you’ve probably noticed, the U.S. stock market’s volatility has been notably low over the past 2 months. It’s been 55 consecutive days without a >1% daily change!
*This is surprising because volatility is typically higher during August and September (more bearish seasonality).

Here’s what happened next when low volatility returned to the U.S. stock market:
first case of “55 consecutive days without a >1% daily change” in 7 months

Conclusion

As you can see:

  1. The stock market can experience some short term weakness (1 month forward returns)
  2. The stock market’s medium-long term forward returns are mixed.

But here’s the more important point. Our market studies from January-August were notably bullish for the stock market. But as of this month, we are seeing more mixed studies (neither consistently bullish nor bearish). This is what happens when we are getting closer to a major top in 2019. Feel free to read my What I am worried about, as a U.S. stock market trader post.
Click here for more market studies.

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