Volatility Speaks: Stock Market Update, Friday January 16, 2026

Turn on the financial news and most days you’ll hear someone talk about the markets being highly “volatile” and uncertain and more often than not you’ll also see the interviewer nod in agreement. With 2026 being the second year of the presidential cycle, the dreaded mid-term election year, historically, while posting positive returns, these mid-terms year, like we are in in 2026, have elevated levels of volatility and exaggerated seasonal swings in returns.  English language translation?  The highs and lows, the ups and downs in the indexes, throughout the year, tend to be wider and have more frequent swings.

Some years the market and the returns it generates feel volatile but aren’t mathematically that far off a normal year. Over the last 5 years an investor had to endure a -27.5% peak to trough decline in the S&P500 in 2022 and another Trump Tariff dump of -21% last year in April with over-10% of that coming in less than a week, that’s out of the ordinary volatility.

But investors know that the longer term reward for investing in equities is the return. The “risk” is enduring the downside volatility at times. Here’s the data from Charlie Bilieo on annual drawdowns and their frequency.

A -5% decline in the S&P500 happens nearly every year, while a -10% decline happens, every 18 months. So, are the markets really more volatile than they have been, or is the financial media guilty of making investors “fee” more volatile? Looking at the data, a bear market decline of -20% happens a little over once every 4 years while a recessionary decline of -30% happens 1 out of 10 years.

With these stats in mind, it brings me to this week’s topic, market volatility, what you’re feeling, what’d happenings, and what we are seeing over the next 4-6 months.

Let’s stock off talking about bond volatility. I like to follow a measure of Treasury bond market volatility.  This is an index we’ve discussed many times in the last 5 years, the MOVE Index.  I consider this ground zero for collateral markets that many institutions use to leverage and trade their portfolios on margin with debt to try to amply returns.  I’ve discussed this index in the past during times of severe market stress and forced investor selling in both stock and bond markets by the margin clerks, under the headline “Collateral Damage”, as US Treasuries are supposed to be the safest, risk free asset in the world by which all other public and private market financial products are measured off of.  Here’s a chart of the MOVE index over the last 15 months.

It’s down and to the right. In a very bullish downtrend for bonds and collateral markets.  That’s pretty contrary to most of the talk I hear on financial news about how unhinged the Treasury markets are. Can bond volatility pick up here for a few months if the tariffs get overturned? Or if Fed Independence becomes the topic de jour post 4q EPS reports coming the next few weeks? Sure, but if the new Fed Chair launches QE4 in May or the late 2-3qtr, I would expect this lower to the right trend to continue in the bond market and its volatility.  That would be bullish.

So, pivoting to stock volatility, long time listeners of our investment content know we’ve discussed realized volatility, implied volatility, and forward volatility a number of times. Like many other indicators, market volatility waxes and wanes in cycles. Here’s a list of a few stock volatility measures I like to follow and their levels on Friday, Jan 9^th as of this writing.

Realized stock volatility is a measure of an asset, single stock or index, actual, historical price change over a period, calculated from past price data, like intraday, daily, weekly or monthly prices.  The longer the time frame, the more data that’s used, more often than not, the less volatile an asset class will appear.  Short term extremes high or low get average and smooth out and the performance and return wave expected outcome narrows.

For this video I will use Bberg’s SpotVol Index as our realized volatility reference point.  That is what’s actually happening in the market on a daily basis in price change of the S&P500, not what’s expected in the future by implied volatilities that are used to calculate and trade options.  Right now, SpotVol is around 8.5.  While not an ATL, this is closer to its historic lower bound which it can stay.

But I like to compare this to all of the implied vol data points I can find.  You know the cost of hedging and buying puts to cushion the downside if the market drops suddenly.  You can start with the 1-day and 9-day implied numbers that I only just discovered about 6 months ago. Right now, the options market is making you pay about 50% more to insure your portfolio over the next 1 to 9 days.  Is this too much? Probably not. Why? Well, a lot of headlines have been swirling recently both geopolitical, economic, and potentially legal with the SCOTUS decisions eminent and anything could come out of left field that shocks the markets for a few days. In fact we got 2-3 of them over the weekend as I wrote this, geopolitical issues in Iran, a potential credit card interest rate limit thrown out by the president and the biggie, the DOJ investigation into the Fed chair for building costs.  Here is the chart of 9-dayy vol.

Also, given the low absolute level of all three of the indexes and data sets, and knowing that the granddaddy of them all, the VIX Index’s historical low band was 12 ex, the record setting no vol year of 2017 the short term measures look until to go lower.  Recall, the VIX Index, the Cboe Volatility Index measures the stock market’s expectation of volatility over the next 30 days on a rolling basis.  It’s not traded. It’s a math equation that uses S&P 500 option prices and is known by many as the “fear index” because it reflects investor sentiment and the cost to hedge or buy insurance in your portfolio for the next 30 days.  Viewers know I’m not a big fan of this index as it’s not directly traded, but I do like to compare its trend and level to history as well as those Vol products that are directly traded in markets, vol futures. Here’s that chart:

I also like to look at the continuous contract curve of vol futures.  On Bloomberg, these are UX1, UX2, UX3…going out the next 8-9 months. Those are Jan, Feb, and March months with them shifting to Feb-April in about a week. I’ve found the most information and predictability in the UX2 and Ux3 continuous contracts. Right now, those stand in the upper teens while those farther out in April and beyond are above 20 and very close to the historic average of about 21.5.Here’s the table of vol futures prices.

This structure says to me as it has for a while, that very little is likely to happen over the next 2-3 weeks to jar the market lower on a sustainable basis. The market is likely to remain elevated overall with earnings reports hitting. However, this structure says to me that there is a open window in Feb through late April that the markets are vulnerable to news or an event that would jolt vol higher and the markets lower.

The good news is should that happen, market participants are likely to “Buy the dip” if/when forward vol futures crossed 21.5-22 and the front months of the vol curve rose and caught up to that level, say 12%+ lower in the S&P50. The “insurance markets” of the stock market, the options markets, are hinting that buyers would flood in and the low would come fast and furiously for a mid-year rally.

This is one of the key reasons we labelled last weeks video “Patience” after the Guns and Roses rock ballad.  The first half of 2026 is one of those years, the options markets are hinting at a real BTD moment will come later in the 1q.

The good news is that our investment team has experience in these types of markets. Remember investors that elevated volatility also means elevated opportunity, for longer term investors.  Historically, investors’ biggest incremental returns come from investing when volatility is high, not low, and markets are down and others are either acting emotionally or worse yet being forced to sell, when they really should be pushing their chips into the center of the table and adding to investments.

What does all this mean to you?

Our advice to you is to keep following our investment content on our Oak Harvest Website and our YouTube Channels and we will be addressing our 2026 Market Outlook on —Jan 29.2026 in a YouTube live stream with Troy, Charles, and myself.  Send some questions in advance if you want any special investment topics addressed.

Investors, whether you desire growth or income, or a combination of both in your portfolio, the entire OHFG team is here for our clients doing what we can to plan for you and your family’s future regardless of what stage you are at in your career or retirement.

Do you need a retirement plan that goes beyond allocating funds to truly fit your needs? We can help you create a retirement life plan customized for your retirement vision and legacy. Call us at 877-896-0040 or fill out this form for a free visit: https://click2retire.com/lets-connect