This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Volatility Likely to Stay Elevated in September

NEW YORK ( TheStreet) -- August's wild ride is almost over for stocks but September isn't likely to offer much of a respite, according to new commentary from Standard & Poor's.

Not only is September historically the worst month for equities -- the S&P 500 is down an average of 0.5% during the month since 1945 vs. a gain of 0.7% for all 12 months -- but it's also the third most volatile month of the year on a historical basis, as measured by the frequency of high-low percent swings in excess of 10%.

Another indicator that stocks could see more violent swings is the percentage spread for the S&P 500 from its intraday high and low readings in August. The 18.7% reading is the widest seen since the 24.9% spread registered in March 2009 when stocks bottomed out from the financial crisis.

"Heightened volatility is likely to be part of 'the new normal,' in our opinion, whether you rely on ancient history or just point to the recent past," Sam Stovall, chief investment strategist at S&P, writes in research note on Monday. "Looking to the number of times per year in which the S&P 500 advanced or declined by 2% or more in a single day, the market is currently about three times more volatile than it was in the past."

Stovall observes that, from 1950 through 1999, the S&P 500 rose or fell by 2% or more in a single session an average of five times per year. Since 1999, however, the averages have jumped to 12.5 times per year for advances and 14 times for declines.

"Who or what deserves the blame? High frequency trading, hedge funds, inverse and leveraged ETFs, take your pick," Stovall says. "So, if you think the S&P 500 has become more volatile in the past decade, you are correct, and now you can prove it."

After last week's strong performance for stocks -- the major U.S. equity indices delivered their best weekly gain in two months -- Stovall says the market appears to be in the midst of a counter-trend rally that looks promising in the next few weeks from technical standpoint. He cites commentary from Mark Arbeter, S&P's chief technical strategist, who said on Friday the major indices "continue to work" on a potential double-bottom reversal pattern.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
BAC $15.81 -1.43%
AAPL $128.46 -1.50%
FB $78.97 -1.79%
GOOG $558.40 0.53%
TSLA $203.34 -1.86%


DOW 18,132.70 -81.72 -0.45%
S&P 500 2,104.50 -6.24 -0.30%
NASDAQ 4,963.5270 -24.3630 -0.49%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs