In times of great economic upheaval, we often hear people say that the markets have become more volatile than ever. In the current climate, they would be correct.

The New York Times has looked at intraday day highs and lows in the S&P 5000 and concluded that since 1962 anyway, price fluctuations of 4 percent or more during intraday sessions "have occurred nearly six times more than they did on average in the four decades leading up to 2000. The price swings today may feel even more notable because the 1990s represented a relatively calm time for trading. In contrast, price fluctuations of 1 percent and more during intraday trading were more common in the 1970s and 1980s."

As for closing prices, "more-frequent jumps could also be clearly spotted. Thirty percent of trading days since the start of 2010 were up or down more than 1 percent at the time of the closing bell. That's far more than the 20 percent of such jumps in the 1990s."

This certainly feels true. The real mystery is why. The knee-jerk response is that high-frequency traders--mainly algorithmic traders--and perhaps ETF activity have caused the pronounced swings. But that has yet to be proven. We applaud regulators and exchanges that are taking a close look at this. One also has to wonder if the amount of capital devoted to market making is at historic lows, which might explains some of the volatility.

In any case, this points to the need to ponder the current market structure and whether it makes sense in light of today's market realities. We get into these issues often over on FierceFinanceIT.

For more:
- here's the article

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