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No Change In The Regime: Volume Dismal In Yet Another Green Day

Tyler Durden's picture





 

The chart below paints a vivid picture of market breadth dynamics both recently, and since the July rally: for the past month, beginning with the 2010 highs "correction", the down channel has been accompanied by spikes in volume, compared to the "bounce" leg, which, and this should come as no surprise to anyone, has been on well below-average volume, both during the recent period, and during all prior micro "correction" rebounds. So, for the benefit of the cheap seats, here is leg xyz of the magical bear market rally, once again occurring on fumes, and that's being generous. And for all those looking to start a quant operation, here is all you need to know - If low volume then buy, else sell.

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Mon, 02/22/2010 - 15:56 | Link to Comment Anonymous
Mon, 02/22/2010 - 16:09 | Link to Comment E pluribus unum
E pluribus unum's picture

There are no retail investors anymore. They all left and they won't be coming back. It's all Bennie. He owns all the mortgages and all the stock. And he still has a lot of cash left so maybe he'll buy up some CMBS too

Mon, 02/22/2010 - 16:35 | Link to Comment AR
AR's picture

It's slow today, so I'll add to your comment. I've repeated this story over the last 6 months from time to time, and I'll do so again here. Back in June 2009, a colleague of ours (a $5+ Billion dollar hedge fund) traveled to Europe on a meet-n-greet, money raising campaign. At the time, he returned and said "there is 50% LESS MONEY out there to invest." I presumed his observation was due to lost investments, the meltdown, margin calls, etc..  Then, a month later (keep in mind they are large) he told us, "...there is no market..."  I said, what do you mean there is "no market?" He literally said, there is no market. What he meant was, they could not find market participants to take the other side of their trades -- literally. Bid/Ask spreads were huge, and there was no liquidity anymore for them initiate trades as they’ve done in the past (or, much less).

Since then (the last 4-6 months) all of us, have now discovered, exactly what he was talking about. There is NO MARKET (period). Volume is gone. Government, computers, quants, algos, HFT's -- whatever you want to label them – now are said to dominate 70% of all volume today. Thus, keep in mind too, that they dominate 70% of "today's volume" (which on the above premise, is 50% LESS than the real volume the market traded before the credit crisis).

So, think about all this. One, there is 50% less real volume. 70% of the existing (50%) volume is computer led. Thus leaving, theoretically, only 15% of the actual volume in today's markets being "true or real volume" (when compared to volume prior to the crisis).  Only 15%.  So... now we see the problem with the market's today. This is a huge structural shift (and problem). We don't see it getting better in the short-term.  Interesting dilemma. Good luck everyone...

Mon, 02/22/2010 - 16:37 | Link to Comment macfly
macfly's picture

What a great perspective, thank you. 

 

Could I ask just how a solo investor like me, who is managing my retirement should progress in a market like this. Is there not money to be made on the move that the ECB and Sterling seem destined to make?

Mon, 02/22/2010 - 17:41 | Link to Comment Arthur
Arthur's picture

Be careful.  Don't buy the market.  Buy solid companies in accord with your investment goals.  For my IRA, I focus on solid dividend returns and look to maximize my total return by buying when a stock is beaten up.  I am now focusing on Euro based internationals and multinational utilities  under the grand theory that a tanking Euro will cause certain companies to become undervalued.  UL, IRPY and GSK are three I have bought this year.  If the Euro tanks, I'll buy more.

Mon, 02/22/2010 - 18:33 | Link to Comment girl money
girl money's picture

@macfly

we have a severely damaged economy and will be in a prolonged recession.  buy and hold will KILL YOU.  we have an anti-business regime in power in Washington.  GDP is a joke, not to be trusted.  buying dips when volume is as pathetically anemic as it is presently may be wrong move... if you know how to play with inverse leveraged ETFs, you can capture the bigger down moves, cash out, wait for yet another vapor-volume rally to hand the i/l ETFs back to you at a discount, rinse and repeat.  stay nimble, do quick trades.  expect more downside risk than upside room until we really see a turn in top line revenue growth -- consistently -- and until something really creates jobs.

in summary, we are in a world of caca and grinding lower.  trade accordingly. 

Mon, 02/22/2010 - 19:44 | Link to Comment Anonymous
Mon, 02/22/2010 - 16:57 | Link to Comment Anonymous
Mon, 02/22/2010 - 17:53 | Link to Comment deadhead
deadhead's picture

Thanks AR.

If your group has any really shitty stocks or real estate to sell, call Ben Bernanke at 1.800.FREE.MONEY and tell him deadhead sent you.  He's in a big buying mood still and he has another 10 trillion left to spend.  You can probably get better than par for what you got, but I suggest you act quickly cause Benny the phucknut said he might buy every single British Gilt ever printed in the next month.  Also, please be aware that Buffet, Paulson (Soros now on C) are calling him every hour to buy BAC, C, WFC, and other assorted regional pieces of shit.

 

Mon, 02/22/2010 - 19:27 | Link to Comment AR
AR's picture

Hey DH  /  You'll really like this (if you still around for the day). I just read some of the surrounding comments. You know...I find it absolutely facinating that so many "youthful players" in this business, year after year, feel more compelled to criticize the various postings and comments, rather than take a step back, process the information shared, learn from it, put it in perspective, and make money. No wonder 95% in this business lose money to guys like us. Youth always wants to rush into a situation and fuck the young heifers. We older, more experienced bulls, just want to corral ALL of them, then take our time choosing which ones to screw, and on what day, at our own leisure. I'm thankful I'm old (and rich). Funny stuff... MORAL: Send me your young and inexperienced -- I need the volume.  Smile buddy...

Mon, 02/22/2010 - 19:40 | Link to Comment deadhead
deadhead's picture

Magnificently said AR!

I've been a driver/type a all of my life but was fortunate enough to have great mentors that taught me to overcome the weaknesses of this particular personality profile.  it took a long time but patience is truly a virtue (saves lots of stress too).  

 

 

 

Mon, 02/22/2010 - 19:52 | Link to Comment Anonymous
Mon, 02/22/2010 - 20:12 | Link to Comment AR
AR's picture

.

Mon, 02/22/2010 - 15:57 | Link to Comment carbonmutant
carbonmutant's picture

Humans not required.

Mon, 02/22/2010 - 16:02 | Link to Comment E pluribus unum
E pluribus unum's picture

It's so interesting watching the computers sell to each other - NOT!

 

At what point do they acknowledge that HAL is the richest "man" in the world and owns a controlling interest in every corporation in America?

Mon, 02/22/2010 - 16:39 | Link to Comment macfly
macfly's picture

I remember reading somewhere that by 2013 computer will have more processing power that the human brain, and by 2020 they will exceed the computational power of all 6.5 billion of us!

 

So much for the Rockerfeller-Rothchild mafia taking over the world, HAL is gonna snag it right out from under them!

Mon, 02/22/2010 - 16:03 | Link to Comment BS Inc.
BS Inc.'s picture

I would defy anyone who's been trading a long time to find a similar period in market history. When historians look back at this period in market history, their reaction will be a collective "WTF?"

Mon, 02/22/2010 - 16:21 | Link to Comment JJP
JJP's picture

lol

Mon, 02/22/2010 - 18:08 | Link to Comment Anonymous
Tue, 02/23/2010 - 08:28 | Link to Comment perchprism
perchprism's picture

 

Really?  I wonder.  There might not ever be another real market to compare this one to.  OK, I'm a pessimist. 

Mon, 02/22/2010 - 16:04 | Link to Comment Prof Gulliver
Prof Gulliver's picture

Today will be the fifth-straight up day. Hey, Ben and the boys allowed 3 percent correction. You expect to get more? Gun that SPY, Benny. And he can do this any day he wants. You won't see another "correction" until GS' midyear SPX numbers are hit. It's just like professional 'rasslin'.

Mon, 02/22/2010 - 16:06 | Link to Comment Anonymous
Mon, 02/22/2010 - 17:55 | Link to Comment deadhead
deadhead's picture

interesting observation...thank you.

Mon, 02/22/2010 - 16:09 | Link to Comment Anonymous
Mon, 02/22/2010 - 18:01 | Link to Comment BS Inc.
BS Inc.'s picture

I don't think of ZH as a "if you can't beat 'em, join 'em" type of website, though. Yes, bad traders can always complain about something in the market, but even good traders can, upon taking a step back, see that there is something very odd about this market's action. There is also another group of good traders who will always say "Who gives a fuck? Just trade it". I can respect that position, but I don't have to abide by it.

 

Fri, 05/07/2010 - 18:02 | Link to Comment Sabibaby
Sabibaby's picture

Actually a lot of us come here looking for heads to put on stakes, as if we should give a fuck about the market...

Mon, 02/22/2010 - 16:17 | Link to Comment rubearish10
rubearish10's picture

The trouble is, we're anticipating another meltdown experience and we're over prepared. The question is how to wait........I'm in the the dark here!!!

Mon, 02/22/2010 - 16:19 | Link to Comment rubearish10
rubearish10's picture

Hey YO! What's up with the fnc'ls??? Are they thinking higher rates (DR and more) makes them more money? UMMM....

Mon, 02/22/2010 - 16:21 | Link to Comment Anonymous
Mon, 02/22/2010 - 16:23 | Link to Comment carbonmutant
carbonmutant's picture

Looks like God's work to me....

Mon, 02/22/2010 - 16:30 | Link to Comment Anonymous
Mon, 02/22/2010 - 16:23 | Link to Comment Dixie Normous
Dixie Normous's picture

Dontcha know?  It's a fad market. Everyone is now trading COTTON:

http://futures.tradingcharts.com/chart/CT/50

Mon, 02/22/2010 - 18:34 | Link to Comment JJP
JJP's picture

Simple Dixie… Currency paper is composed of 25 percent linen and 75 percent cotton. Helicopter Ben has been going through a lot of it recently. :-)

 

Mon, 02/22/2010 - 16:28 | Link to Comment walküre
walküre's picture

There are other exchanges which aren't controlled by the cartel.

 

 

Mon, 02/22/2010 - 16:36 | Link to Comment Anonymous
Mon, 02/22/2010 - 16:45 | Link to Comment Anonymous
Mon, 02/22/2010 - 16:49 | Link to Comment Anonymous
Mon, 02/22/2010 - 16:51 | Link to Comment Anonymous
Mon, 02/22/2010 - 16:52 | Link to Comment Anonymous
Mon, 02/22/2010 - 16:55 | Link to Comment rhinotrader
rhinotrader's picture

RUT is up 11 days in a row. Up 9% trough to peak on absolutely zero news and no volume. The only way to trade this is sell puts and go long (I am the opposite).

Mon, 02/22/2010 - 16:56 | Link to Comment Anonymous
Mon, 02/22/2010 - 16:58 | Link to Comment Anonymous
Mon, 02/22/2010 - 16:59 | Link to Comment Anonymous
Mon, 02/22/2010 - 17:03 | Link to Comment Anonymous
Mon, 02/22/2010 - 17:57 | Link to Comment Tripps
Tripps's picture

TRADE AT YOUR OWN RISK FOLKS

 

I'M STARTING TO DELEVER MY WHOLE PORTFOLIO AND TRIM IT DOWN

 

A FEW DOWN DAYS WIPES OUT 2 WEEKS OF GAINS IN THIS MARKET

 

THAT'S THE RISK YOU TAKE WITH NO VOLUME RALLIES LIKE THIS

Mon, 02/22/2010 - 20:01 | Link to Comment john_connor
john_connor's picture

One thing apparent is that even the small trend moves (in the context of multi-month or year moves) are taking longer than expected.  You always look back and say "wow, I could have gotten an even better entry if I had waited a day or two."

So, every time you get that impulse, wait a day or two. 

Tue, 02/23/2010 - 00:06 | Link to Comment Anonymous
Tue, 02/23/2010 - 13:52 | Link to Comment Grand Supercycle
Grand Supercycle's picture

 

Just a heads up:

SP500 / DOW / COPPER counter trend rally looks over.

http://www.zerohedge.com/forum/market-outlook-0

Sat, 04/17/2010 - 10:36 | Link to Comment Tom123456
Tom123456's picture

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