Consider it a tale of two markets: The one that started out the year in the most boring fashion ever, transforming to one that lately has been, by at least one gauge, the most volatile.
In the first six months of 2015, the Dow Jones industrial average was never up or down more than 3.5 percent, something that had never happened before. Within that tight range, the Dow crossed its break-even point more than 20 times by late July, also a record.
Now comes the other shoe to drop.
In the wake of concerns about growth in China, the Federal Reserve's looming rate-hike cycle and a raft of other issues, the market since late August has turned violent. Wall Street's favorite gauge of instability, the , has jumped about 120 percent over the past month.
Another measure, though, perhaps tells an even more startling story.
"All or nothing" days, or instances when more than 80 percent of the moves in the same direction higher or lower, have spiked, according to Bespoke Investment Group, which tracks such occurrences as well as the two other trends cited above. There have been 11 of these occurrences in the past 15 trading days alone, after happening just 13 times in the first 159 trading days of the year.
"While it is common to see an uptick in the number of all or nothing days in the S&P 500 as volatility picks up, the frequency of all or nothing days in the S&P 500 over the last 15 trading days is unheard of," Bespoke's Paul Hickey said in a report. "Using our breadth data going back to 1990, we have never seen a 15-trading day period where the S&P 500 saw as many or more all or nothing days than it has in the current period."
Interestingly, while the wild movements cause agita in the near term for market participants, the longer-term picture gets better.
Those with a short-term horizon often get burned in the "all or nothing" environment, with 12-day declines in two recent such periods, in November 2008 and October 2011, at 3.43 percent and 3.09 percent, respectively, according to Bespoke, along with the 7.3 percent drop during the September 2015 run.
Returns get better over time though: In 2008, which saw a crippling bear market and the S&P 500 tumbling by more than 60 percent, the three-month return after the all-or-nothing period was down 15.2 percent. However, 2011 saw a 9.7 percent gain in the next three months. One year out, both 2008 and 2011 saw advances of more than 25 percent for the index.
Hickey points to one reason in particular for the "all or nothing" trend: the proliferation of exchange-traded funds.
The funds, which resemble mutual funds but passively track indexes and can be traded like stocks, have exploded in popularity. The industry went from having just 119 funds with $151 billion under management in 2004 to 1,526 funds with $2.1 trillion in assets as of July 2015, according to the Investment Company Institute.
Heavy trading in a broad-based ETF like the $163.5 billion SPDR S&P 500 Trust, which has an average daily volume of $30.2 billion, causes its underlying assets—all the components of the market index—to move as well, adding to the "all or nothing" phenomenon.
"While ETFs have been beneficial for investors looking for a low-cost way of gaining exposure to the broad market, one of the unintended consequences has been that the daily correlation of individual stocks has increased," Hickey said.
Correlation had been on the wane earlier this year, helping active managers outperform their benchmarks at a better rate compared to recent years. However, 65.3 percent of the group still underperformed over the past year, according to new data released Thursday by S&P Dow Jones Indices.