Where Did All The Volatility Go?

Where Did All The Volatility Go?

Article Summary

  • Volatility has hovered near historical lows for the past several months, which could be a sign that risk is not being accurately reflected in the stock market.
  • Margin levels are near all-time highs, which historically indicates a market correction could be imminent.
  • A healthy amount of volatility is needed for stocks to go higher from here.

There’s something interesting happening in the financial markets right now. And the way the markets reacted to the Greek debt crisis on Monday could be a precursor to a far bigger problem. There’s been irrational behavior displayed by traders and investors for the last several months – it’s not quite the kind of “irrational exuberance” once coined by Alan Greenspan, but there are some disturbing correlations that are being displayed in the markets starting with a peculiar lack of volatility…

 

Read full article at Seeking Alpha
Share This