Upon closer inspection, each up day in U.S. equity markets reveals a telling lack of conviction.
Investors express confidence in the direction the market is headed via the amount of trading volume on U.S. exchanges. Lately, volume has all-but disappeared.
Total U.S. equity volume was down -12% yesterday versus its three month average. This trend, of declining volume on rising prices, has continued for some time now. Interestingly, volume has been accelerating on down days.
Understanding the intimate relationship between price, volume and volatility (how we manage risk here at Hedgeye) is essential for any investor. In the video below, Hedgeye CEO Keith McCullough gives a brief tutorial on the different permutations of price, volume and volatility with insights about what the current environment is telling us.
Today's U.S. stock setup isn't good.