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Market Speaking Volumes

|Includes: SPDR Dow Jones Industrial Average ETF (DIA)

Volume Review

In a Dow Theory Q&A piece dated April 8, 2013, we said the following of Dow Jones Industrial Average (NYSEARCA:DIA) trading volume:

"The lack of trading volume in the stock market since 2009 reflects little or no participation on the part of the public. If this is true, then any meaningful rise in trading volume (on the buying side) due to added participation from the public could result in tremendous gains. This thought sits in the back of our mind as we strategize the best way to take advantage while not being over exposed."

The story on trading volume is somewhat murky, sometimes it matters and sometimes it doesn't. Learning to discern the two can be frustrating. However, it is hoped that our work on the topic will help provide proper perspective.

Taking a step back, our prior work in trading volume should be reviewed critically. Below are key articles that touch on the topic with the March 13, 2013 piece being, in our view, the most important real-time article on the subject:

Taking the Plunge

What is the best way to describe how trading volume has changed in the last eight years? We would equate trading volume to the preparatory stages of what would be considered a successful competitive dive into a swimming pool. There are three stages to a successful dive: 1) touchdown 2) maximum depression 3) takeoff.

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