A bit’s been going on in the United States lately.
There’s been a interest rate hike delivered by the Federal Reserve, a new president has been inaugurated, and it’s the middle of US corporate earnings season.
Despite those events, typically associated with generating short-term market volatility, it’s been a little dull for US stocks recently.
According to Morgan Stanley’s US equity team, the Dow Jones Industrial Average (DJIA) has now posted a weekly trading range of less than 1.5% for six consecutive weeks.
The chart below shows the drop in weekly ranges over that period.
The bank says this is the longest stretch of sub-1.5% weekly ranges since the final week of 1993, some 1,203 weeks ago.
So it’s been a little dull, at least compared to usual.
Morgan Stanley says that should another sub-1.5% weekly range arrive this week — taking the stretch to seven — it will be the longest consecutive run since mid-July 1973.
The narrowing in trading ranges has also corresponded with a period of low volatility with the VIX index — a measure of expected volatility looking one month ahead — continuing to sit at depressed levels.
While the lack of movement will be of interest to contrarian investors — it is, after all, unusual for such a long period of time — it may suggest to others that if stocks couldn’t muster a major move after all that’s been thrown at them, what will make that trend change in the period ahead.