A Wild And Crazy Year So Far

I am talking about the stock market year-to-date.

wild_crazy_guys

Every day since the year started, the Dow Jones Industrial Average, the most widely watched American index, has swung up or down in the triple digits i.e. over 100 points.

2015_djia_daily

In fact, the average swing each day since Jan 1, 2015 has been 268 points for the Dow.

2015_djia_volatility

What does this mean to the average Joe?

In a nutshell, volatility means worry for the future. And investors hate volatility.

The good news is there were four large changes of the DOW of more than 300 plus or minus points before a recession happened in 2008.  So we can predict the next recession.

Here is an excellent detailed look at the current volatility by Forbes.

http://www.forbes.com/sites/billgreiner/2015/01/23/stock-market-volatility-and-what-its-return-means-for-the-global-financial-system/

Now that is wild and crazy.

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Wall Street Goes Frothy – No Not Starbucks

I am talking about huge swings in the market.

swing

No, not that type of swing.  I am talking about the huge daily changes in market value.  See the chart below courtesy of bigcharts.marketwatch.com.

djia_frothy

Specifically, this chart shows huge daily changes in the Dow Jones Industrial Average (DJIA) during the week of Sept 22-26.

Monday 9/22 down 105

Tuesday 9/23  down 100

Wednesday 9/24 up 150

Thursday 9/25 down 250

Friday 9/26 up 167

The summary is the market is frothy.  Why?  Because the QE3 is winding down, the economy is still struggling and the financial sector has been over stimulated.  Thus there is a lot of nervousness.

The conclusion: we are overdue for a big correction.