Chart of The Week: Volume Vanishes...

Like Roubini and Houdini, the bearish side of this market’s daily trading volume has vanished. The short sellers of everything Great Depressionista may be out of supply on the buy-to-cover side of the US market. It has been a long 9 months of short covering. October 2009 may very well have signaled the crescendo.

 

In the Chart of The Week that Matt Hedrick and I put together you’ll take away two very important points:

  1. The SP500 selloff from its YTD high (1097) came on accelerating daily/weekly volume studies
  2. The SP500 rally from its most recent higher-low (1036) came on decelerating daily/weekly volume studies

While volume is only one factor in our multi-factor risk management model, it’s a critical one, particularly when combined with price momentum.

 

Provided that volumes remain light on the up moves, and the SP500 fails to make a higher-YTD-high versus that established on October 19th, 2009, the probabilities continue to heighten that the YTD highs for 2009 are in.

 

Fully realizing that the SP500 is trading up a +1.3% at 1083 today, my risk management process still leads me to make this call.

 

“You’ll miss 100% of the shots you don’t take”

-Wayne Gretzky

 

Keith R. McCullough
Chief Executive Officer

 

Chart of The Week: Volume Vanishes...  - Houdini

 


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