Heading into the new week, we have more of the same. Stocks are trading in an historically tight range. The longer this continues, the greater the move when the range ends. As I always mention, many times you will see the market move out of one side of the range and fake out the masses and then immediately head to the other side of the range like stocks did on August 2.
Very interestingly, smart money is gearing up for volatility to greatly expand after Labor Day. Although most people refer to volatility in decline terms, stocks could actually break out to the upside, causing volatility to expand. Volume has also been in the news lately as it’s not only anemic for this time of year but also on a relative basis for this time of year. As I often hear, “everyone is in the Hamptons”! That’s right, all 300 million citizens are packed into that tiny area on the end of Long Island.
While it is vacation time, there are plenty of people working and just last year, we saw the stock market collapse 15% at this time. While I am definitely not forecasting anything like that for 2016, investors should be in guard that geopolitical events can pop up and cause a quick move.
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