Authored by Michael Lebowitz via RealInvestmentAdvice.com, The price movement in the broad S&P 500 index is relatively calm. Yet the market’s undercurrent, as measured by sharply diverging returns across stock sectors and factors, is anything but calm. The current market picture we paint is well embodied by a quote from Jules Verne in 20,000 Leagues Under the Sea. “The sea was perfectly calm; scarcely a ripple disturbed its surface. But beneath this tranquil exterior, powerful currents were flowing with irresistible force.” Given this divergence between the calm market surface and the volatility of its underlying stocks’ returns, let’s get a better grip on the market’s undercurrent and decipher what it may be trying to tell us. A Calm Market The graph below shows that the S&P 500’s upward trend has recently flattened into a tight range with minimal volatility. Such consolidation is common after a sharp upward price trend, as the market experienced since early April.  The next graph shows the average true range (ATR) for the index. ATR is a measure of realized volatility. …