However, since Labor Day, the market has shown signs of a changing temperament. There were six 3-day slides in the last 4 months of the year and so far in 2015*, we've already seen two separate 5-day losing streaks (*the first streak began in late December).
We're of the mind that investors, who could have set their accounts to "auto-pilot" the last two years, should be paying close attention to the market's recent chop. While we're firmly in the camp of believers thinking we've entered a new secular bull, there's no reason the market can't have a deeper correction. Below is a chart of the S&P with implied and realized volatility shown at the bottom. Both the VIX and the Average True Range (ATR) have picked up significantly over the last few months. While realized volatility has moved toward levels reached during October's 10% sell-off, the market has only fallen 5% from its most recent peak.
Further, given the gyrations and headline risk we've seen thus far in 2015, we're surprised by the relative complacency we've heard/witnessed from other investors. That doesn't feel right to us and could be a call for further caution.
