The 200-day simple moving average is a key indicator that many investors use to gauge and predict long-term trends in the market. So, the fact that the S&P 500 just fell below that measure means that volatility is potentially back on the menu in the stock market. In fact, 10-day realized volatility nearly doubles when price is below this key indicator.
Realized volatility is a critical measure of the variability of asset prices over a specified period. In bull markets, with positive sentiment and strong economic signals, realized volatility tends to drop.
Bear markets tell a different story. Falling prices and negative outlooks can push realized volatility up, highlighting the uncertainty and sharper price swings that define riskier market conditions.
What the recent moves in the S&P 500 say about long-term market volatility remains to be seen, but it is a measure that we’re watching as we head into spring.
#EyeonVolatility
