Weekly Wins: This Chart Offers a Volatile Prediction for Stocks
Stocks have gone sideways since the election. But this indicator suggests we could see the beginning of a new trend.
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I'd like to start off this week with a chart I've been watching. It's two different measures of volatility and they give us a partial picture of what the market is preparing to do.
Since election day, the S&P 500 is up just 3%. What’s more, it’s traveled sideways, rather than up, due to some rotation out of at least a few of the Mag 7 names.
And there’s been volatility! Each new day brings with it a comment out of Washington that can send stocks up or down. Investors are playing right along and hoping to make money on the gyrations. OK, maybe those aren’t investors, they’re speculators. And they’re loving it.
You can see the increase in volatility as measured by the purple indicator at the bottom of this chart. It’s the average daily range of the S&P as a percentage of the current price. And it’s high relative to the rest of the year. That’s what gyration looks like.
However, a different volatility indicator is telling a different story. I’ve overlaid the Bollinger Bands on the S&P 500. And, if you take a close look, you can see that they’re pretty narrow, hugging price action more closely than at any other time this year. The green indicator, the Bollinger Bands Bandwidth, shows this more clearly.
What does it all mean? First of all, there’s indecision among investors. That’s the daily volatility we’re seeing. Since the election, the market has gone sideways. Up, down, up.
When the bands are tight like this, it means that the market is about to make a big move. The thing is, they don’t tell us whether the move will be upwards or downwards. And that’s ok. The good news is that there will be some resolution to this sideways trend as soon as next week.
On to some of our favorite articles this week.
Gamestop GME is like a cat with nine lives. Or maybe a business with no viable strategy. Ed Ponsi takes a skeptical look at this company’s latest ploy to be the next MicroStrategy.
And while GameStop is buying alternative assets of a digital kind, Louis Llanes tells us about his investment strategy of the musical kind. If you’re a musician or love guitars, you’ll enjoy reading The Art of Finding a 'Keeper': Guitars, Stocks, and Long-Term Value while learning strategies you can use to think about value in the collector markets as well as stocks.
From GameStop to Guitars, let’s look at a more conventional investment strategy. Kate Stalter teaches us to Ditch Those Old Set and Forget Portfolios and Build a Flexible One for Any Market. This is a great strategy for investors looking to combine core holdings with tactical allocations and rebalancing.
Now, speaking of portfolios, Chris Versace, who manages TheStreet Pro’s Portfolio made a few moves this week to lock in profits. I won’t give them all away here, but you can read all about these moves in We’re Locking in Big Gains on 5 Portfolio Champs.
Last one from the Pros at TheStreet Pro for this week. Alex Frew McMillan takes a look at two hot Chinese companies, Alibaba BABA and BYD BYDDY. Alibaba will be working with Apple AAPL to provide AI to Chinese smartphones. BYD, meanwhile, tells Tesla TSLA to take the fast road out of town as it announces that it will be offering autonomous driving features in cars costing just $10,000. You can read more about it in Alibaba, BYD Ride High on ‘DeepSeek Effect.’
Here are a couple of stories from around the Arena
I’ve mentioned before that I’m a car geek. In fact, I sometimes write for our sister publication, Autoblog. And I’m not geeky about things that you might see on the road. I’m geeky about wild sports cars, especially vintage rally cars. Kimera is bringing back one of my favorites. It’s beautiful, it’s Italian, and you can read more about it in Kimera is the Italian automaker keeping Lancia's legacy alive.
And since I’m on the tail end of a week in the mountains, here’s one from our friends at Powder. It’s about Corbet’s Couloir, which is one of the most insane ski runs that you might find yourself staring into. Younger me almost skied it once. My friend went in first and came out with a broken thumb and a ski that curved the wrong way after he hit the rock wall. But the crazies featured here in the Top 9 Moments of Kings & Queens of Corbet's Couloir 2025 will both scare and entertain you.
Have a great weekend!
