Stocks are on the verge of breaking the record, possibly marking the end of a period of futility that resulted in a sharp retreat from the peaks hit in the late summer and fall of 2018. After more than six months of corrective disruption, many market participants have the durability The volume of trade remains close to the lowest level of 2019.
"It was a bit like a rocking market gone a lot, but nowhere," said Matthew Bartolini, head of SPDR Americas Research at State Street Global Advisors, to MarketWatch in a Tuesday interview.
In fact, Monday's action marked the lowest total business volume (put together on the New York Stock Exchange and its major companies and Nasdaq) ̵
To highlight the subtleties, the continuous 10-day averages of composite volumes are the lowest since 12 September and volumes are at the lowest monthly average since August last year. The average volume for April, if applicable, would be the worst April since 2013, according to Dow Jones Market Data.
It's not very clear what these weak equity volumes mean in the Dow Jones Industrial Average
1.6% below its closing point on October 3, the S & P 500 Index
1.1% below its previous high and the Nasdaq Composite Index
only 1.5% of its all-time high.
Some argue that the lack of trading activities shows the lack of market participation of a wide range of investors.
"There was a bit of reluctance for the New York Stock Exchange to fully participate in the rally … with a decent number of people on the sidelines," said Bartolini of State Street. He said those people who have missed "the rebound [since the December low] are waiting to see what happens in the earnings season."
True, tired volumes that are trending down for years are not telling the whole story of the state of the market.
Industry participants have also highlighted that the breadth of the market – the number of companies rising to not lows or lows – is falling, as measured by an overlooked metric, the Value Line Geometric Index
The geometric measure that tracks and weights the average movement of a number of stocks was still about 7.6% from its all-time high on August 29, but rose since the low of December (+ 23%) by 23% (see chart below).
The Value Line is used by many technical analysts as a measure of market participation in rallies or sell-offs, as indices such as the S & P 500 and Nasdaq, which are weighted by market capitalization, are distorted can use larger components like Facebook Inc., Apple Inc.
AAPL, + 1.95%
AMZN, + 0.10%
and Google Parent Alphabet Inc.
991 + 19.59%
Should investors be worried about small amounts? The jury may not be available yet.
"There is this debate about volumes. Is it really important? "Quincy Krosby, chief market strategist for Prudential Financial, told MarketWatch.
In her turn she is looking for volumes to confirm or refute the upward trend of recent markets. "Volume [measures] will help you confirm the movement in the marketplace, especially if we are looking for signs that relate to the tug-of-war that [between bulls and bears] is taking place, and help investors identify which side of the tug of war is winning," She said.
Krosby currently represents BlackRock Inc.'s view.
BLK, + 0.20%
. This may be illustrated, in part, by small volumes that may indicate profits. Markets may have more room for a rally even though the indexes are setting new records as investors search for a catalyst for further gains. (A reversal of the Federal Reserve's aggressive rate hike and apparent progress in bargaining between China and the US was part of the recent bullish narrative.)
Read: MarketWatch's snapshot of the market
Of course Warns Fink that an accumulation of previously discarded investors can lead to a collapse, often defined as an unexpected and unexpected price increase for an asset class, and that this may not turn out well.
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