Volatility is spreading like a virus: Strategist

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."

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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.


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Sara Eisen

Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.

In March 2018, Eisen was named co-anchor of CNBC's "Power Lunch" (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.

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