Friday, June 25, 2010
java script:void(0)Dow: 38.1% S&P: 23.8% NAS: 33.3% R1K: 23.8% R2K: 38.1%
"I have seen it repeatedly throughout the world: politicians get a country in trouble but swear everything is okay in the face of overwhelming evidence to the contrary."
—Jim Rogers (Financier, Adventure Capitalist, b. 1942)
Summertime Volume Trends
By Christopher Mistal
In the two annual volume patterns below (click on image for large view) we have plotted the one-year seasonal volume patterns since 1965 for the NYSE and 1978 for NASDAQ against the annual average daily volume moving average for 2010 so far. The typical summer lull is highlighted in yellow. The recent volume trend for the current year (red line) shows a perennial trail off in volume may be underway despite some above average volume this spring that coincided with the beginning of the market correction.
In the last chart the volume pattern for the NYSE and NASDAQ during bullish 2003 highlights the unusually high summertime volume that coincided with massive gains and the early stages of the last bull market. Volume in 2010 seems to be following the standard script, tapering off towards the end of spring and plunging before July 4th.
An atypical surge in volume this summer, especially accompanying outsized gains, would be an encouraging sign. However, should traders lose their conviction and participate in the annual summer exodus from The Street; continued market weakness is expected.
