The chart below shows the random probability that US stocks will rise on any day, week or month.
Volatility soared: optimistic about the stock market in the medium term
The fluctuation is mean regression. When the volatility is extremely low, it tends to rise. When the volatility is extremely high, it tends to fall.
The current volatility is very large. Standard & Poor's 20th bullinger bandwidth has expanded more than 5.5 times in the past three weeks.
The following figure shows that the 20-day standard deviation of the Standard & Poor's 500 has expanded by more than 5.5 times in three weeks in history:
Every time the stock market rises a year later.
In most cases, the stock market will rise after 9 months, and three will fall slightly.
These signals are concentrated after the plunge of 1982, 1987, 1992, 1995, 20 14 and 20 15.
The average volatility returns, which is contrary to the stock market trend.
It may still fluctuate greatly in the short term.
In the short term (such as the next few weeks), the stock price is likely to continue to fluctuate. Neither absolutely bullish nor absolutely bearish.
In the past 65,438+03 days, the S&P 500 index has risen or fallen by more than 65,438+0% for at least eight days. Historically, this has led to greater fluctuations in long-term returns.
At the same time, the five-week RSI of Standard & Poor's 500 is very low, which is currently 13. The following is the first time in the history of the Standard & Poor's 500 that the RSI dropped to 14 within 5 weeks and 3 months. You can see that the S&P 500 tends to:
There will be a short-term rebound in the coming days. Then form a new low in the next 2-3 months.
But most of these cases occurred after the stock market plummeted by more than 30%. But now the stock market has only fallen by 10%, and the situation is not exactly the same. In any case, this shows that short-term fluctuations will be great.
In addition, the S&P 500 has fallen for at least 20 days in the past 26 trading days. The S&P 500 index has the same situation in history, usually rising in the second week, then falling to a new low in the next two months, and then bottoming out.
Finally, the S&P 500 index is now more than 2.3 standard deviations below the 20-week moving average. Explain that the short-term stock market should rebound. But the data does not support this view.
The following is what happens when the Standard & Poor's 500 index falls by more than 2.3 standard deviations and is below the 20-week moving average (that is, below the lower Pohlinger range). Short-term and long-term returns fluctuate greatly.
Finally, analyst Troy Bombardia thinks that S&P will peak in the middle of 20 19. In the medium term (the next 6-9 months), it is still bullish. At present, the volatility is very large, because the volatility is mean regression and contrary to the stock market trend, it is definitely bullish on S&P in the medium term.
However, analysts stressed that at present, the probability of ups and downs is 50/50, and the stock market may rise and fall in the short term. Therefore, if the short-term situation is not obvious, we should pay attention to the medium-term trend and the longer-term trend, and don't get lost in the noise.
(article source: chartist)