The $INDU rose over 200 points on Monday and settled back to keep about 1/2 the day's gain. This was a 200 point range or over 1% for the day. In North America we consider that to be a meaningful big day.
With the Dow around 16000, a 1% day is 160 points, a 2% day is 320 points and a 3% day is 480 points.
Watching the $NIKK (Japanese Equity Market Index) is not exactly calming. Within the last year the ATR has been higher than 3% / day! This chart is a great example of how the ATR can also be used to help measure volatility and help with recognizing trend change.
When the $NIKK originally broke out in December 2012 the ATR (shown at bottom) also broke out. It is not uncommon for the actual ATR to rise as the price rises where a 1% range in a market is normal. When the $NIKK peaked around 15500, the ATR was around 225 so roughly 1.5%. When the $NIKK fell rapidly, the ATR spiked to ~3.5% per day or 475 points! This is the "average" range over a last 14 day period. We may call it a 14 day average but a 3.5% ATR was remarkably big, not average. The Dow trades roughly a thousand points (16000 vs. 15000) above the $NIKK level. If we were having 500 point swings as an 'average' over the last 14 days, there would be a lot of worry in the market. While everyone discussed the huge run up in the $NIKK back in April May 2013, the daily swing was really remarkable on the one month pull back where the $NIKK dropped 20%. Then as the $NIKK rose, the ATR settled back. The $NIKK high coincides with the $INDU high currently of December 30, 2013. Notice the ATR was not still at the lows. The ATR was roughly 1.3%.
Now the ATR is currently higher than 2% / day which is higher than the first market top and near the highs of the last 7 months. This tells me there is still a lot of unease in Japan on how things will work out. Recently the $NIKK made a rough looking H/S top with a 15000 neckline. We can see how important that neck line has been since the last May 2013 high.
Lets zoom in on the right edge of the chart.