It's Quiet ... A Little Too Quiet In The Markets The Past Month
The S&P 500 opened for trading on August 1, 2016, at 2,173.15 and closed the month at 2,170.95.
The S&P 500 index isn’t alone, as the Dow and Nasdaq indices ended the trading month nearly where it started as well. August’s trading session was quiet and calm, but as the saying goes, it is always calm before the storm.
How Calm Was It?
As noted by CNN Money, the S&P 500 index closed on Wednesday with a less than 1 percent move, which actually marks the 38th consecutive session in doing so.
In fact, this is the largest stretch dating back two years and a complete reversal from earlier in the year when it seemed global events and uncertainty resulted in the S&P 500 moving one percent in any direction more often than not.
“Historically, August has been one of the most volatile months, but 2016 is anything but normal,” CNN Money quoted Ryan Detrick, a senior market strategist at LPL Financial as saying.
CNN Money also quoted Lizz Ann Sonders, chief investment strategist at Charles Schwab, who said in a research note the market “has been on its best behavior” as of late. However, she added, “[H]istory shows subdued periods tend to be followed by a lift in volatility, and some weakness in returns.”
Meanwhile, the Volatility Index, also known as the “fear index,” may be showing signs of life. The index gained 18 percent, although this occurred immediately after hitting a two-year low in early August.
There are many factors that can bring upon a “storm” to the markets. The U.S. presidential election is only beginning to heat up ahead of the first debate, the Federal Reserve will gather later in the month and a rate hike is a possible outcome.
A plethora of central banks from across the world are also expected to meet throughout the month.
And then there is the G20 meeting and a gathering of OPEC members.
It is possible that Thursday and Friday’s trading session will be light ahead of the long weekend. When traders and investors return next week, the storm could have already begun.
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