Do we have a reason to expect that stock market volatility will return anytime soon?
Perhaps you've noticed that stock index prices have not been "all over the place" lately. The frequent up and down price moves of the past 2-3 years have been relatively absent.
"The market's persistent rise...has resulted in a collapse of volatility."
Financial Forecast Short Term Update (1/7)
Does this weaker upside momentum have investors worried? No: if anything, the opposite is true. Many believe the market is gathering strength before the next thrust upwards. For example:
"[Jim] Cramer thinks we're at the beginning of a huge move higher."
CNBC, (1/5)
As EWI's Robert Prechter said during an interview with CNBC's Larry Kudlow (12/30):
"We have very positive market psychology. People are bullish from the lowliest investor all the way up to the most sophisticated institutional investor. We have waning upside momentum but it's not subtle. It's been waning for two months and especially in the last two weeks."
On the other hand, the "collapse of volatility" could be the calm before the storm.
As you consider which direction the market will take in coming weeks, consider this fact from the Short Term Update (1/7):
"Periods of low volatility precede periods of high volatility and vice versa. The question is always: when will a relatively low volatile period lead to a pickup in volatility?"
Ah, when? That's the $64,000 question.
The Jan. 7 issue of the Short Term Update reveals what the Elliott wave structure shows regarding when an increase in volatility is likely to happen.. Plus, that STU forecasts how much volatility to expect, by comparing today with another time of volatility (which most of us will never forget).