es trading range

[z32000]

please correct me if i'm wrong...

if the economy was to grow at a rate of say 12 percent a year, does this mean that most likely the daily ranges should naturally become larger (if you exclude the market going into recession)...

for example,
in 2003, SPX was at 100....so in order to achieve a 12% gain, it needs to get to 112 in one year....that's 12 points


but say one day, SPX reached 1000, does it mean it will need to get 120 points for the next year to achieve a 12 growth rate?

if so, does this mean that the higher the market goes, the wider the daily ranges are going to be....
usually means more profit for some...
unless they also reduce the amount a point is worth

 

[El OchoCinco]

The economy and the market are two very different things. The growth rate in one is not replicated in the other. GDP growth of 4% does not mean market will grow 4%. I think you are confusing two different things.

 

[Pekelo]

Quote from z32000:

if so, does this mean that the higher the market goes, the wider the daily ranges are going to be....

This is actually a good and interesting question. You are right, if nothing else changes, pointwise, the range will be wider when the market climbs higher. So if let's say the average daily range 2 years ago was 12 points/1% for SPX and the market is now 25% higher, if the range stayed 1% it is still 25% wider in absolute points, thus 15 points...

I wonder if this is the reason why the ES has became more volatile then the YM in the last 8-10 months. Although both indeces went up in the last 2 years pretty much the same, the YM is lucking in range...