Imagine That | Equities Plummet = Massive Spike In Volume

Takeaway: Friday's 65% jump in total equity market volume, on a big down day for stocks, bucked the 2016 trend.

Imagine That | Equities Plummet = Massive Spike In Volume - volume cartoon 10.14.2014

 

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!

 

Imagine That | Equities Plummet = Massive Spike In Volume - volume 6 27

 

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

 

Imagine That | Equities Plummet = Massive Spike In Volume - volume 6 24


SECTOR SPOTLIGHT | Live Q&A with Healthcare Analyst Tom Tobin Today at 2:30PM ET

Join us for this edition of Sector Spotlight with Healthcare analyst Tom Tobin and Healthcare Policy analyst Emily Evans.

read more


Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more