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Stock Market Volume: Doldrums Or Summer Mayhem? at Trader’s Narrative

As I alluded to in the weekly sentiment review, the bears - or rather, the permabears - have been saying that this rally has been built on a shaky foundation because of the lack of volume.

This in spite of record shattering daily volumes during the deepest and darkest days of the sell-off. And in spite of the calendar being in the thick of the “summer doldrums”. And in spite of the total volume averages reaching unheard of extremes.

Here is the 15 day moving average of the NYSE total volume:
NYSE total volume long term

And here is the 15 day moving average of the Nasdaq total volume:
nasdaq total volume long term

As you can clearly see, ever since 1999, we’ve followed a predictable script on Wall Street: the summer sees the lowest volume period of the year.

I’ve marked the month of August in yellow on the charts so you can compare what has happened previously on 8 previous occasions.

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2 Responses to “Stock Market Volume: Doldrums Or Summer Mayhem?”  

  1. 1 Prospectus

    So what does this volume picture say? That the panic has overwhelmed the summer dullness? Or just that permabears can’t harp about volume in this rally?

    I’m a recovering permabear myself, and I’m trying to better my sense of market timing, so I appreciate your posts on this subject!

  2. 2 Babak

    no worries. We’ve all succumbed to the permitis that causes traders to either be constantly bullish or bearish… to answer your question, the low volume rally isn’t such a negative as they make it out to be. We’ve had significant bottoms put in with low volume rallies from their low.

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