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title: Volatility Here to Stay
description: Volatility Here to Stay
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[TRACE Turns 20](https://articles.marketsmedia.com/trace-turns-20)

 08.22.2011

 By Terry Flanagan

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# Volatility Here to Stay

 08.22.2011 By Terry Flanagan

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With the market tumult continuing amid economic concerns and declining investor confidence, volatility looks to become the new norm for the foreseeable future.

“It's likely to be more volatile because of (professional trading),” said Timothy Hurley, managing director with Bentley Associates. “It's not good for the health of the market overall. It's a little reminiscent of the flash crash, and it's scary. You don't see the market moving on fundamentals, you get these up and down movements that suggest instability, and certainly volatility. Investors see volatility, and sit on their hands for a while until it goes back to normal.”

The most recent surge in volatility came as investors reacted to news of slowing economic growth, weak consumer confidence and increasing unemployment.

The Chicago Board Options Exchange's Market Volatility Index, or VIX, has been on a wild ride in recent weeks, rising from about 18 in late-July to as high as 48 on Aug. 8, as the markets reacted to the debt ceiling situation and the Standard & Poor's downgrade of U.S. debt. It then trended slowly downward over the following days to about 32 on Aug. 17, before once again spiking upward as investors brace for a possible double-dip recession. The VIX, also known as Wall Street's “fear gauge,” measures the implied volatility of the S&P 500 index.

According to BATS Global Markets, equity trading volume was also steadily declining since reaching a peak of nearly 18 billion shares on Aug. 8. Volume declined by more than half during the week following, with about 7.3 billion shares changing hands on Aug. 17. As volatility shot up on Aug. 18, so did trading volume, with 11.7 billion equity shares traded. It was the first time there were more than 10 billion shares traded in one day since Aug. 11.

 

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