Returning to Normalcy?

The recent decline in the VIX has been well-documented and is generally indicative of the pullback in fear that hit the market in August.  While part of the reason for the VIX's decline are technical and seasonal in nature, other indicators also point to a degree of normalcy coming back to the market.

The chart below shows the number of trading days per month where the S&P 500 had an intraday high-low spread of more than 2%.  From January through July, no single month saw more than two trading days that fit this criteria.  Then in August, the number of days ballooned out of nowhere to 20 out of 23 trading days.  Since then we have continued to see a greater frequency of 2% days than we did prior to August, but the important trend to note is that instead of staying near the highs of August, the number of 2% days has been steadily declining bit by bit each month.  While December still has another four trading days left after today, so far this month there have only been four days where the S&P 500 saw an intraday high-low spread of 2%.  How long this trend lasts is anyone's guess.  However, bull or bear, you probably don't care how long it lasts as we could all use a break from the wild swings of the last several months.

 Like what you see? Subscribe to Bespoke Premium today, and for a limited time receive a free copy of Collapse! - The Commemorative Game of the Financial Crisis.