Jonathan Krinsky, Chief Market Technician at MKM Partners, has alerted us to two tables that show just how ridiculously quiet it is on Wall Street. As Linette Lopez explained earlier, despite the soaring stock market, Wall Street is losing a fortune, because volatility and volume are so low.
In the last 20 years, only one time (!!) has the S&P 500 traded in a more narrow range than it did Friday and is doing today.
This is what silence looks like on Wall Street.
S&P 500’s 20 Narrowest Daily Trading Ranges Since 1994
The other days on the lowest volatility list are trading days around holidays, the kinds of days people show up for and wonder, why is anyone here at all?
And in that context, trading on Wall Street looks even more ridiculously quiet.
But the curious thing is that it’s not like there hasn’t been anything going on.
Last week saw an FOMC meeting and a press conference from Fed Chair Janet Yellen, and this week features a rash of economic data. And yet the stock market is trading like we’re on either side of the New Year, or Christmas, or Thanksgiving holiday.
The SPX currently has an intra-day range (high to low) of less than 5 points, or just 0.25%. That ranks as the 3rd lowest daily range in the last 20 years (5k trading days). Friday was the 2nd lowest at 0.24%. The lowest was 0.20% on 12/30/13. The highest intra-day range in the last 20 years was 11.52% on 11/13/2008.
There is no clear takeaway from this, other than volatility is low, and this is just another representation of that. What we can say, is that a major market top (like we saw in 2000 and 2007) is likely to be preceded first by increasing volatility, or expanded trading ranges. In 2007 for instance, the SPX saw a 0.33% trading range in April, but the range then increased steadily in the months leading up to the market top in October.
Many of the prior extremely low trading range days came during bullish periods of the market, just as the highest trading ranges came during bearish periods. In fact, 15 of the top 20 trading ranges for the SPX came in 2008.
Stock market bears will likely see the compressed trading ranges as presaging a market top later this year or early next year.
Bulls will cite Krinsky’s observation that trading ranges expand at tops as evidence that the current bull market can go higher still.
As has been the case over the last few years, there is something for everybody to get excited about, even if the excitement is that absolutely nothing exciting has been going on.
On the flip side, these are the 20 widest daily trading ranges over the same period.