Structural Volatility Won't End For Several Years, Derivatives Strategist Says

While short-term traders are trying to trade some of the wild swings in the volatile 2016 market, MKM Partners analyst Jim Strugger has been looking at the longer-term implications of this market volatility.

In a new report, Strugger compared the current volatility to similar market stretches in 1997 and 2007. While both periods ultimately preceded a recession, the 1997 bull market continued for another three years prior to the recession, while the 2007 bull market lasted only another four months.

Volatility And Recessions

Strugger feels that the current volatility is once again an indication of a recession on the horizon, but he isnt convinced its coming anytime soon.

Perhaps it has already begun as some contend, but that is not confirmed from a volatility perspective, he explained. If the current volatility event continues to abate as we expect, U.S. equities should be due for a nice bounce in the coming weeks.

Related Link: M&A Expert Says Market Volatility Delaying Deals, But Not Discouraging Them

Testing: One, Two, Three

With that prediction in mind, MKM ran a screen of stocks and ETFs with the steepest call skews and found Sarepta Therapeutics Inc (NASDAQ:SRPT) and Cal-Maine Foods Inc (NASDAQ:CALM) at the top of the list for stocks, and Guggenheim CurrencyShares Japanese (NYSE:FXY) and iShares Barclays 7-10 Year Trasry Bnd Fd (NYSE:IEF) topping the ETF list.

Disclosure: The author holds no position in the stocks mentioned.

Image Credit: Public Domain

Latest Ratings for CALM

Date Firm Action From To
Oct 2015 BB&T Capital
Aug 2015 BB&T Capital Upgrades Hold Buy
Jun 2015 DA Davidson Initiates Coverage on Buy

View More Analyst Ratings for CALM View the Latest Analyst Ratings

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