Standard & Poor’s 500 Index versus Volume (200-day ma)
Source: Bloomberg Chart of the Day
Futures look strong this morning, following yesterday’s low volume back and fill — the NYSE consolidated volume was the quietest of the year to date.
But as the chart above reveals, the further this rally has run, the lighter the volume has become. I cannot speak to what the silicon is up to, but broad carbon based participation is surely missing. That is surprising, because sentiment — a carbon, not silicon factor — is up in the nosebleed areas: Bulls at 57.3 versus Bears at 15.7.
While volume has been anemic, breadth has been especially strong, with individual names fairly correlated to the broader index. Hence, it is less of a “stock pickers market” and more of a market participation environment.
David Wilson of Bloomberg notes that trading volumes are going to get even worse: “Trading may contract further when Citigroup Inc. carries out a 1-for-10 reverse stock split, proposed in March. Citigroup has accounted for 6.2 percent of U.S. volume during the past two years, according to Bloomberg data. The reverse split is set for completion after the close on May 6.”
Trading Dwindles as U.S. Stocks Revive Rally: Chart of the Day
Bloomberg News, 2011-04-05