Markets Swing Wild as Volatility Spikes and Gold Tops $3,200

Technical Stock Market Briefing for Day & Swing Traders
| By Harry Boxer, Technical Market Analyst

The back-and-forth of the week’s tariff-related news sent U.S. stocks and overseas markets on wild rides, producing big intraday swings. On Tuesday, the S&P 500 rose as much as 3.8% at one point before closing down 1.6%. The next day, the index surged 9.5%, recording its biggest daily gain since 2008.

Weekly Gains After Big Swings

Rising and falling trade tensions buffeted the stock market again, and by the time it was over, the major U.S. indexes recorded big gains that nevertheless fell short of offsetting the previous week’s more sizable losses. The NASDAQ surged more than 7% for the week, the S&P 500 added almost 6%, and the Dow climbed about 5%.

The S&P 500 almost entered a bear market on Tuesday, as its closing level left the index 19% below the record high that it had recorded on February 19. A decline of 20% or more would have marked a bear market. But then, the S&P 500 posted its third-largest daily gain since World War II. At Friday’s close, the S&P 500 finished the week 12.7% below its record level.

Gold Surges to All-Time Highs

The price of gold climbed for the fifth week out of the past six, extending a year-to-date surge that pushed the precious metal’s price above the $3,200-per-ounce level for the first time. On Friday afternoon, gold was trading around $3,250, up 7% for the week and 22% year to date.

Volatility Surges, Then Calms

The Cboe Volatility Index (VIX)—a measure of investors’ expectations of short-term U.S. stock market volatility—surged on Monday and briefly reached the highest level in five years, topping 60. Despite a series of big intraday swings throughout the week, the market eventually calmed, and the VIX was down around 17% for the week.

The index has reached that high only eight times in the past 35 years. Historically, it takes about eight months for volatility to return to normal. But what history shows is that fear creates opportunity: when the VIX has exceeded 43, forward six- and 12-month equity returns have tended to be strong—not because volatility is good, but because spikes usually occur when pessimism is already priced in.

Are Markets Carving Out a Bottom?

The spike in volatility, the reset in valuations, and signs that the worst-case trade war scenario may be averted suggest that stocks may find some support and possibly attempt to carve out a bottom.

The upside of this down market is that valuations are now more compelling. All major indexes are trading at or below their 10-year historical averages, potentially setting the stage for improved long-term returns.

In any case, here at thetechtrader.com, we will always: “Trade What We See Technically, Not What We Think.”

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