Volume on Everyone's Mind

“It’s yet another way that the market feels like it’s in the low-volume, Fed-medicated, range-trading, easy-corporate-credit, buyout-happy days of the middle part of the last decade.”

– Michael Santoli

I have this thing where I think the “low volume” lament is the bears’ equivalent of “the dog ate my homework” in terms of missing rallies.  Like, “yes, the S&P 500 doubled in 24 months, but look at the volume.”

It’s not that volume is unimportant, in fact it is the one thing on all of our minds right now, bullish or bearish.  Michael Santoli‘s column on the topic is this weekend’s most talked about.  Barry takes the quotes and comments throughout Santoli’s piece and brings them to their logical conclusion.

What these three comments hint at, but don’t precisely conclude, is that Fed induced rallies tend to be liquidity, not conviction driven. Thus, the anemic volume.

Look at the low volume moves off of the lows that DeGraaf mentioned: 1987, 1998, and 2003; Add to that the fading volume since early 2009. All 4 of these years had major Federal Reserve interventions via a combination of rate changes along with the occasional increases in money supply and/or bond purchases.

This is precisely true, there is very little conviction anywhere.  Even the guys who are most long, myself included, can’t let go of their (our) distrust even for a second.

Except when they’re in front of the media 🙂


Does Fed Intervention Produce Low Volume Rallies? (TBP)

Read Also:

What is Low Volume Telling Us?  (Barron’s)

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. bandar togel terpercaya commented on Jan 23

    … [Trackback]

    […] Info to that Topic: thereformedbroker.com/2011/04/10/volume-on-everyones-mind/ […]