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PCLN, NFLX, AAPL (Many Others) See Volatility Explosions

Did you just see that? A relatively quiet morning in tech (aside from NFLX fading) got party noise loud shortly after 10:30 as volatility in widely followed tech names exploded to the downside. From 10:30-11:00 the following moves happened:

  • PCLN fell from $1088 to $1057
  • NFLX fell from $360 to $333 (after already falling from $388)
  • AAPL fell from $525 to $508
  • GOOG fell from $1008 to $995
  • FB fell from $54 to $52.20
  • AMZN fell from $337 to $325

That was some intense volatility in those individual names, and while the broader SPX did lose 10 points over that time frame, that’s not a big enough drop to say “the market pulled them down.” More appropriate would be to say that these big cap tech names pulled the market down. Given that we’re at all time highs, the huge volatility we just saw is likely to leave a few traders and investors on edge, and rightfully so. However, what I would remind those who are nervous about what happened this morning, is that volatility works both ways.

Naturally, we always notice volatility in the market when it is working to the downside. Such a view though, can cause you into missing out on the fact that volatility has been working to the upside for the better part of 2 weeks. Take a look at the returns in the same names mentioned above since the market formed its most recent bottom on October 8th:

  • PCLN rose from $972 to $1098
  • NFLX rose from $282 to $389
  • AAPL rose from $478 to $528
  • GOOG rose from $843 to $1019
  • FB rose from $45 to $55
  • AMZN rose from $296 to $337

So yes, the volatility just witnessed was alarming, and certainly puts some outright long biased traders (like myself) on notice. My take away though is that sooner or later, upside volatility gives way to downside volatility and vise versa. That’s all this morning was about; the market got back to its true nature of volatility working both ways. My immediate term long bias remains in tact so long as the S&P500 is holding above 1735.

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