Global Investing

“Normal” volatility to help rally?

October 16, 2009

As the graphic above shows, volatility in U.S. stocks has re-entered what could be called normal territory after soaring higher during the financial crisis. The blue band is plus or minus one standard deviation around the 1990 to 2007 avverage.

There may be an implication for equities beyond the obvious sign that things are calming down. Lower volatility is a buy signal in many trading models.

(Reuters graphic by Scott Barber)

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