Throughout the year, we've been updating investors on the no-volume "rallies" and the obvious lack of conviction in each market up move (here and here). Well, volume returned on Friday.
Big time!
During a day of post-Brexit duck and cover, total equity market volume was up 65% versus the one month average. Here's analysis from Hedgeye CEO Keith McCullough on The Macro Show earlier this morning:
"Look at the volume on Friday. Whoa!
How many times have we heard people say, 'Keith, why are you using volume? It doesn’t matter today because the market didn’t go down yet.' That was the same question we heard when U.S. equity beta was at the December high, and at the two June highs.
But look at what the market does on down days. Volume was up 65% versus the one month average. That's huge. Essentially, the liquidity is nowhere to be found unless you have a down day. This is the reality. This is what happens when you let markets clear, volume appears, in a big way. So the less intelligent chart chasing monkeys kept saying rallies on decelerating volume didn’t matter.
Risk happens slowly, then all at once…"
By way of contrast, take a look at total equity market volume Thursday (6/23), pre-Brexit, when the S&P 500 was up +1.3%.
Volume = Non-existent
