Each Monday, MoneyBeat publishes a short column in the WSJ print edition highlighting a statistic getting traction in the markets. This week's "big number" is 4.8%, the S&P 500′s spread between its intraday high and low over the past three months.
Stocks have been running in place over the past three months. Bloomberg News The U.S. stock market is going nowhere fast.
Investors have sold into rallies and bought the dips over the past three months, a choppy trading environment that has left the S&P 500 stalled around record levels.
Over the past three months, the spread between the S&P 500's intraday high and low is 4.8%, the narrowest trading range since October 2006, according to market-research firm Bespoke Investment Group. Since 1984, the S&P 500 has traded in a tighter range over a three-month period only six times. The S&P 500, on average, swings in a 13% range over a three-month period.
The narrow trading range comes as fear has diminished on Wall Street. The Chicago Board Options Exchange Volatility Index, or VIX, fell last week to its lowest level in 14 months, as many investors have stopped betting on large stock swings. The gauge is widely viewed as a proxy for the stock market's capacity for sudden spikes and plunges.
"The broader market couldn’t be more relaxed," said Paul Hickey, co-founder at Bespoke.
The S&P 500 finished Friday at 1900.53, its 11th record closing high of the year. The stock index is up 2.8% in 2014.
Such a tight trading range doesn’t necessarily bode well for future performance. In the other instances when the S&P 500 traded in tight three-month bands, the index averaged a 1% gain three months later and a 2.1% advance six months later, according to Bespoke.
By comparison, the S&P 500 has averaged a 2.4% gain in all three-month ranges since 1984 and a 4.9% increase in all six-month ranges, according to Bespoke.
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