Dog Days Are Here

All five trading days last week ranked among the ten lowest volume days for the NYSE in 2008.  Thursday and Friday were the two lowest days, with Friday taking top honors for the slowest trading day of the year. 

With even more days off expected on Wall Street this week leading up to the Labor Day holiday, more 2008 low-volume records should be broken.  For those that are trading this week, check the spreads before placing market orders.  Your normal bids and asks may be sipping margaritas at the beach!

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Comments

[Matt Blackman:]

Excellent input gentlemen! From a technical trading point of view, volume is extremely important. If a stock or index rallies on low or declining volume, its bearish as it shows that buyers are losing interest or not participating. If volume is declining or low on down days it is mildly bullish as it shows that shorts are sitting on the sidelines and investors aren't dumping shares.

Volume is the fuel that drives rallies. Stocks need steady increases in volume to keep the rally alive. If we see a steady decline in volume during a rally, this normally means that the rally is getting ready for a correction.

The flip side is the stocks can fall of their own weight so that stocks are falling on low volume is not necessarily bullish. In a bear market, stocks can fall for extended periods of time on lower than average volume. For more on this as it pertains to markets this week, see tradesystemguru.com/co...

So what does the fact that volumes are low and falling for most of the major indexes? It could mean one of two things. 1) stocks are consolidating. The problem with this contention is that consolidations are marked by specific chart patterns such as flags, pennants, ascending triangles etc and we aren't seeing these patterns. The more likely possibility is 2) More weakness ahead. The second contention is made even more likely by the fact that Septembers have a habit of being the worst month of the year and the current deteriorating environment.

2008 Aug 25 01:27 PM

[RB9562:]

I love the punch line... Hah!

2008 Aug 25 01:47 PM

[kelaido:]

SPX did not go down in September in 2007, 2006, 2004, 2003.

2008 Aug 25 08:25 PM