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Wanted: VOLUME (part 2)

Posted By Barry Ritholtz On August 17, 2006 @ 10:45 am In Markets,Psychology,Technical Analysis | Comments Disabled

Although the market has started to behave better, there is still one missing element: VOLUME. Typcially, volume confirms price, and when markets sell-off or rally on light volume, the moves are less trustworthy than a high volume action.

In the U.S. equity markets, volume has not kept pace with price, suggesting that recent strength may be more likely a technical rebound than a new bull run.

Our friend Mike Panzner looks at the recent volume trends in four markets:

Four of a Kind?

click for larger charts

Fourofakind [1]

Courtesy of Michael Panzner, Colins Stewart Securities [2]

>

Here’s a look at the recent index gains, and the differences in July and August 5 day movign average of volumes.

 

 

 

Index (low) Return Volume
Decrease
Volume Differences
(August v July)
DJIA (7/18) +4.9% -31.3% 202.4 mil vs. 294.6 mil
S&P500 (7/18) +4.7% -21.7% 1.19B vs. 1.52B
Nasdaq (7/18) +5.2%  -17.2% 1.11B vs. 1.34B
Russell 2000 (7/21) +5.3% -27.5% 461 mil vs. 635.8 mil

 

NOTE: The value for volume is the difference between the 5-day moving average on the initial date and the 5-day moving average yesterday, through 8/16/06.


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URL to article: http://www.ritholtz.com/blog/2006/08/wanted-volume-part-2/

URLs in this post:

[1] Image: http://bigpicture.typepad.com/.shared/image.html?/photos/uncategorized/fourofakind.png

[2] Michael Panzner, Colins Stewart Securities: http://www.amazon.com/exec/obidos/tg/detail/-/032124785X/ref=ase_thebigpictu09-20/104-5115086-3833537?v=glance&s=books

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