What Happened to All of the Dow's Volatility?
Mar 19th 2012 11:20AM
Updated Mar 19th 2012 11:22AM
After taking Friday off, the Dow Jones Industrial Average (INDEX: ^DJI) is once again treading water this morning. As of 10:30 a.m. EDT, the Dow was off a mere 0.08%. Across the pond in Europe, the situation isn't much different; the FTSE 100 (INDEX: ^FTSE) was off just 0.16% in late trading.
The Dow continues an interesting trend toward lower volatility. The Volatility S&P 500 (INDEX: ^VIX) , the most widely measured gauge for market volatility, is down to only $14.94 -- a number far below the $23.40 it traded around at the beginning of the year, and well off its high of $48 last August. A lower VIX indicates lower implied volatility in the future.
However, while implied volatility might be falling, that's largely because of what's been happening recently. While we're used to headlines about "wild market swings," the Dow has quietly been having an extremely tepid year. Through 53 trading days, the Dow has only been up or down more than 1% in four trading days this year. That's a rate of only 7.5% of trading days seeing swings of more than 1% in either direction. Compare that with last year, when 35% of trading days -- or 89 total -- featured the Dow up or down less than 1%! With all doom and gloom reports still coming out of Europe and fears of China slowing down, it's hard to believe markets have been so placid.
Leading the news today is Apple's (NAS: AAPL) plans to offer a quarterly $2.65 dividend while approving a $10 billion buyback. As I wrote about earlier on Fool.com, while this dividend move alone won't turn Apple into a high-yielding dividend monster, it's a conservative first step. As Apple's cash generation abilities continue to grow, the company should easily be able to grow its payouts at a high rate.
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At the time this article was published Eric Bleeker owns shares of no companies listed above. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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