Market volatility could increase by a factor of five this year, says market historian Sam Stovall, chief investment strategist at research firm CFRA.
Year to date, the S&P 500 has tallied 10 high-volatility days in which it rose or fell by 1 percent or more -- more than in all of 2017.
“We think investors should prepare for five times this YTD count” of big market moves, Stovall said in a report Tuesday. “In addition, we advise investors to brace for the likelihood of multiple 5%+ declines this year.”
Historically, in years following below-average volatility like investors saw last year, markets averaged 49 high-volatility days, which is the historical average since WWII.
In addition, CFRA expects the equity market will fail to recover from its latest decline before retesting and possibly bottoming beneath the Feb. 8 closing low.
In a December report, CFRA noted that after years like 2017 that was marked by above-average new highs and below-average volatility, the S&P 500 gained an average of only 3.1 percent and rose in price only 55 percent of the time since WWII, versus an average annual advance of nearly 9 percent with a rise about 75 percent of the time.