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Is the Stock Market’s Volatility about to Spike in October?

Stock-Markets / Stock Markets 2018 Sep 26, 2018 - 02:22 PM GMT

By: Troy_Bombardia

The stock market’s volatility continues to be lacking recently.

VIX has completely collapsed, and is now trading sideways in a narrow range. You can see this via VIX’s narrow weekly Bollinger Bands.

VIX’s 20 weekly standard deviation is now <1.06.

Historically, this means that VIX tends to rise within the next 1 month. Spikes can be huge.

This suggests that short term traders can try going long VIX right now. Also remember that October tends to be the most volatile month of the year for the U.S. stock market (seasonality).

Meanwhile, the S&P 500 has gone 64 consecutive trading days without a >1% gain or loss.

Here’s what happens next (historically).

Notice how the stock market’s forward returns aren’t necessarily bearish (except for the short term). However, the stock market does become more volatile.

Click here for more market studies

By Troy Bombardia

BullMarkets.co

I’m Troy Bombardia, the author behind BullMarkets.co. I used to run a hedge fund, but closed it due to a major health scare. I am now enjoying life and simply investing/trading my own account. I focus on long term performance and ignore short term performance.

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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