Market Volume

I hit the return key before I wanted to in my prior post.

Market volume has been light. I suspect that this is why we are seeing a choppy market. Algorithms and larger players can push stocks around in an iliquid environment. The chart below is a monthly chart of the S&P500 with total NYSE volume.

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Volume has seriously declined since the peak in March 2007. As this secular sideways market grinds on it appears that market players are looking for a day job. July volume was 33.6 B shares. Since 2000 the only years showing lighter July volume were: 2005 (33.4 B) and 2001 (30.9 B).

I checked the last secular consolidation and don't see quite the same magnitude fall off in trading over its 18 year period however it is apparent. See second chart. Volume didn't start rising again until after the 1974 bone crushing bear market bottom. I show five bear market sized corrections during that secular period (<-20%). We have had only three such pull backs during the current era and we haven't been in the sideways period nearly as long. Perhaps this suggests that we have another bone crusher decline in our future before we are ready to rock and roll and maybe more than one.

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