Wanted: VOLUME (part 2)

Thursday, August 17, 2006 | 10:45 AM

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

Courtesy of Michael Panzner, Colins Stewart Securities

>

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.

Thursday, August 17, 2006 | 10:45 AM | Permalink | Comments (36) | TrackBack (0)
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Comments

I wonder how the volume this year compares to typical July/August differentials? It seems like August is always light. Bob Pisani would know!

Posted by: oldprof | Aug 17, 2006 11:35:26 AM

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