While broad measures of market volatility aren't showing outlandish readings, volatility is being transmitted among subsets of the market like a virus. So observes Nicholas Colas, chief market strategist at Convergex.
"We're seeing risk filter through in ways that aren't linear," Colas said Monday. "The transmission mechanism of communicable disease and investor fear works in much the same way, and we have some time to go before we either find a cure or the illness runs its course."
In other words, since the current volatility being experienced doesn't have any one cause, it's not likely to simply evaporate.
"We're going to have a very volatile first half of next year in my mind, because what we're seeing is different threads of volatility and different concerns feed off each other," Colas said in a Monday "Trading Nation " segment.
"For example, we have energy prices down over the last 18 months. That infected the high-yield market for bonds, and that in turn is beginning to cause some concern in the investment-grade market for corporate bonds as well," he said. "So we're seeing threats and threads of volatility feed on themselves, and we're going to see more of that next year."
Still, after a choppy first half, Colas expects stocks to begin to move higher in the second half of the year — based on his bullish or at least unbearish take on the U.S. economy.