Yesterday’s bounce might have been a relief for the bulls, but today’s swoon most likely re-ignited some ulcers. The S&P 500 has broken its upward trendline with convection and had a minor bounce off of the 50 day moving average:
On top of the ugly trading, we are starting to see a shift in investment banking sentiment with some calling for significant declines ahead:
Equities and oil were again weak today, but the more interesting question is just how volatile everything is going to get. My feeling is that the magnitude of the move in gold might just be a foreshadowing of the volatility we could see in the coming weeks and months. The realized volatility in 2012 averaged out to about 12%, but let us not lose sight of the volatility we can see in mildly volatile years. In the past few days the rolling 1 month realized has jumped from 7.5% to 15%, but could it go to the 50%+ that we saw in 2011?