Volatility  |  APR 2009

Volatility Is Dominant Theme In Stocks by Michael Carr, CMT

Volatility Is Dominant Theme In Stocks by Michael Carr, CMT The market may be setting up for a period of consolidation. From a technical perspective, the biggest factor in the markets is volatility (Figure 1). Since the large down move in autumn 2008, price action has settled into a consolidation pattern. While some technical indicators show signs of strength, others indicate further weakness. Bollinger bands, the technical trading tool developed by John Bollinger in the early 1980s, quantifies the observation that volatility is dynamic, described by Bollinger as meaning that periods of low volatility are inevitably followed by periods of high volatility and vice versa.

by Michael J. Carr, CMT