For those that have traded since the 1990s, the stock market from the beginning of 2004 to right before the summer of this year was maybe the most boring market we've ever seen. The lack of action makes internet surfing more exciting than trading. Things finally changed this summer but that lasted only for about 1 month in August, now its back to the same old same old, you will have occasional wide ranging trading days, but most are just daily grinds now, back to trying to grind out points instead of seeing whiplash like moves in both directions. August was a daytrader's dream, now its just like watching grass grow, of course for everyone except those trading China stocks. LOL. There is naturally built up complacency that grows from these nonvolatile conditions where people view a 10% equity downswing like its a bear market, when its absolutely nothing from a historical perspective. When the volatility really does return, I'm talking 1997-2002 style volatility, you will see a ton of hedge funds geared for these low volatility times get blown out of the water in huge waves, creating unforseen opportunities for the prepared. It will happen sometime in the next 2 years. Like Jim Rogers, I'm not going to try to nail the top, but I know its coming sometime soon.
august was a local's dream.. it was nice to see paper get its ass handed to it for a month straight.. I was trading bonds that whole month and was having so much fun. Markets operate in cycles so of course it will be back, but any trader can make money in those markets. A good trader is dynamic and manages to make coin in all markets
I still don't understand why WS ordered the FED to cut the rates and kill volty. Don't they have more opportunities to cheat and steal in fast markets ?
One thing that has happened is the ability to go short has been opened up to a much wider audience than in the earlier periods you mention. The wide variety of 30% always short hedge funds lends more fuel to upside rallies and has the effect of taking volatility out of the market. the fact is with these ETF's everywhere splicing and resplicing sectors there may be a time when the market is 100% self contained, the averages don't change much but beneath the hood massive liquidity sloshes from one sector to another driving up stocks 30 40% before leaving them and find finding another sector to bid up. the high stocks they don't crash though they fall into the safety nest of ever multiplying ETF's and short sides of hedge fund portfolios... they tend to pop after bad news not go down further. None of this help you in small cap land of course but I occasionally look at the bigger picture too. What's really interesting is the LACK of performance though from these funds that are 30% short. when the market goes into correction they just don't make up the difference... the % of downside move is quickly absorbed by the market. It's a beachball set up now with the ball repeatedly bobbing back to the surface. But to say that the market is in prolonged stupor now may lead one to miss great short ideas in oil and gas as well as great rallies in homebuilders and electric meter readers! In the old days If I said I wanted to buy a water stock I would search and search and maybe find one. Now one can cruise through several ETF's specializing in water or clean energy and buy baskets much more easily... I have yet to try any of these new instruments out of course but I think their effect on the market has been one of stabilization maybe to the point where they took away the short on downticks rule on purpose! For a flat market too long WILL drive away uniformed money as well as foreign inflows. ~ stoney
I agree 100%, there is just nothing out there. Maybe a morning dip and then back to the same annoying grind higher. I honestly dont understand how real traders like this low volitility bull crap market? Give me a violent, fear driven bear any day.
Trading days are real slow, a trader has to expand beyond just the US equity market in order to find action. Emerging markets and commodities are where the volatility have moved to. Crude oil and the Hang Seng are very tradeable these days.
stocks are pretty dull for the most part that is why we have futures and options. they are more volatile and more risky. CL oil that is action...
Playing devil's advocate, one might say that the volatility from 1997-2002 was out of the ordinary and primarily the result of a once in a generation bubble in US stocks. Who's to say we won't see that kind of vol for another 25 years?
1997-2002 was from the explosion of online discount trading. deregulation. in 2002, the SEC banned daytrading.