Is This the Return of Volatility? | $VIX

Volatility

Is This the Return of Volatility? | $VIX - z turb

This is one of the biggest things that gets people run over on the long side. When volatility storms back in a hurry (i.e. a volatility move of 34% yesterday on front-month VIX) that’s going to leave a mark. 

To put this into context, it was the first down day (of over 2%) for the S&P 500 since October which is a long time ago.  In the last two years, we’ve only had five market-down days of over 2%. Only five.

Is This the Return of Volatility? | $VIX - zz 06.30.15 chart

Now if that sounds like “not a lot of market-down days,” you’re right. If you go back to 2011, you had twenty market-down days of greater than 2%. And that’s when what was happening?

  • Europe was slowing
  • Europe went into crisis
  • US blamed their own slowing on Europe
  • Bonds went up

Oh the memories, the memories…