Pop Quiz: Without peeking, can you identify which month had the best day for the S&P 500 in 2014 and then which month had the worst day so far?
How about if I said TODAY was the best day of 2014 for the S&P 500? That’s actually true.
If the best day for 2014 happened in October, when did the worst day of 2014 occur? Also October?
Let’s take a look:
The Range/Volatility Chart above plots the S&P 500 Index with the Intraday Range (a simple measure of Volatility) along with the point gain (on an up-day) or point loss (on a down-day).
First, we note a few pockets of Volatility (consistent days of high intraday range), mostly during sell-offs or retracements during 2014.
Volatility tends to “cluster” or appear together – rarely do we see random days of high volatility without other days around it of volatility.
See my prior research post “Comparing S&P 500 Volatility from Bear Market Bottom to Present.”
With that in mind, we can see that today’s (October 21) session posted the best gain (up 37.27 points) of 2014 during a period of abnormally high volatility.
That may be shocking but it’s true – the second closest day also occurred during our recent pocket of high volatility on October 8th with a gain of 33.79 points.
The third best day of the year occurred March 3rd with a gain of 28.18 points.
So when did the worst day of 2014 occur?
Actually there are two and there’s a tie.
The most recent “worst day of 2014″ also occurred during October’s volatility storm as the market plunged 40.68 points on October 9th.
Technically the “worst” losing day of 2014 was February 3rd with a one-day loss of 40.70 points.
We tend to get clusters of “best and worst” days during pockets of volatility like the one we’re seeing now.
Stay vigilant and active during these periods and realize that they will be followed with periods of lower volatility – just like a cycle.
For more daily updates from Corey, visit his blog at Afraid to Trade.com.