When we think of market volatility, we generally focus on the broad market and such gauges as the VIX. In the chart above, however, we're looking at average daily trading range for 2007 (blue bars) and 2008 (red bars) across the various S&P 500 sectors.
Note how 2008 stands out from 2007 in its increased volatility. Indeed, if we just look at the S&P 500 Index (SPY) alone, we can see that the average daily trading range has risen by 50%.
Not all sectors have increased volatility equally. The average daily trading range has doubled for the financial stocks (XLF), and it's risen over 80% for consumer discretionary shares (XLY)--two sectors affected by recession and credit crunch concerns.
Interestingly, the three sectors with highest daily volatility in 2008 have been financials (XLF), energy (XLE), and materials (XLB). The credit crunch and the rise and fall of commodities have been market movers in 2008. These sectors offer twice as much daily movement as the more sedate--and more defensive--consumer staples shares (XLP).
Short-term traders look to volatility for opportunity, but clearly this is both a function of what you trade and when you're trading. Some years offer more movement than others, and much of this yearly shifting is concentrated in a limited number of sectors.
.