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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 | 240568 Anonymous
Anonymous's picture

Does no one work on wallstreet anymore? It's not a vacation week. What's the deal? Is it that no one but computers wants to buy and no one is brave enough to sell?

Mon, 02/22/2010 - 16:09 | 240590 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 | 240616 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 | 240622 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 | 240692 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 | 240763 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 | 240823 Anonymous
Anonymous's picture

Recommending the leveraged index based ETFs (inverse and regular) to any novice trader or investor (which is what the guy asking the question sounds like) is really a crappy idea. The pricing mechanics (which, btw, I do understand) are not intuitive and do lend themselves to making these ETFs day trading or, at most, swing trading vehicles. So unless you are at the level of sophistication where you trade options (or feel comfortable trading) options or a regular basis AND YOU UNDERSTAND YOUR GREEKS, I would stay away.

BTW, the easy trade in the leveraged ETFs is to wait for a vol spike and short both the long and the short versions of each in an [equal] weight (you can do a ratio trade if you want).

Mon, 02/22/2010 - 16:57 | 240647 Anonymous
Anonymous's picture

I like and appreciate your comment, but it's not a dilemma...at least not for me.

Mon, 02/22/2010 - 17:53 | 240709 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 | 240806 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 | 240819 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 | 240832 Anonymous
Anonymous's picture

don't forget your viagra, stud.

Mon, 02/22/2010 - 20:12 | 240859 AR
AR's picture

.

Mon, 02/22/2010 - 15:57 | 240570 carbonmutant
carbonmutant's picture

Humans not required.

Mon, 02/22/2010 - 16:02 | 240578 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 | 240624 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 | 240579 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 | 240606 JJP
JJP's picture

lol

Mon, 02/22/2010 - 18:08 | 240738 Anonymous
Anonymous's picture

John Law tried to keep his French scheme floating. Wouldn't be surprised if today's trading is pretty much a repeat of that minus the computers.

Tue, 02/23/2010 - 08:28 | 241323 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 | 240581 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 | 240585 Anonymous
Anonymous's picture

One thing that screams to me this is nothing but a short-term cyclical bull market is the open interest on S&P 500 futures and E-mini futures. Take a look at what the open interest did during the beginning of the last bull market and compare it to this one. Open interest continues to decline as stocks move higher...it's now near a decade low.

Mon, 02/22/2010 - 17:55 | 240713 deadhead
deadhead's picture

interesting observation...thank you.

Mon, 02/22/2010 - 16:09 | 240591 Anonymous
Anonymous's picture

RANT ON:

ZH is a great site, but its posts like this (or maybe more so the comments) that annoy me.

If you don't like/get the market then leave. No one is forcing you to play. If the quants run the market then you need to learn to run with them. Complaining about it doesn't make you any money, and its not like there is so little volume out there that you cant get filled on most anything you want (and if you can't then you're too big to be reading ZH anyway).

:RANT OFF

Mon, 02/22/2010 - 18:01 | 240724 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 | 337302 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 | 240602 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 | 240604 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 | 240607 Anonymous
Anonymous's picture

I'm not a stock analyst, but I pretend to be one as Iplay my air guitar to live Freebird in front of the mirror wearing my sisters panties over my head and even I figured this one out. It's called GS and their band of Umpa Lumpas running the Stock market pump machine.

.

Mon, 02/22/2010 - 16:23 | 240608 carbonmutant
carbonmutant's picture

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

Mon, 02/22/2010 - 16:30 | 240614 Anonymous
Anonymous's picture

Very nice

Mon, 02/22/2010 - 16:23 | 240609 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 | 240764 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 | 240613 walküre
walküre's picture

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

 

 

Mon, 02/22/2010 - 16:36 | 240620 Anonymous
Anonymous's picture

Attention passengers, fasten your seat belts please, we are close to stall speed.

Mon, 02/22/2010 - 16:45 | 240631 Anonymous
Anonymous's picture

...yet..

Mon, 02/22/2010 - 16:49 | 240634 Anonymous
Anonymous's picture

I agree with the first post, although it blows my
mind to think about real volume being 15% of old. Congrats on the successful reflate!!!! Hope you all enjoy those assets. I don't want em, thanks.

Mon, 02/22/2010 - 16:51 | 240636 Anonymous
Anonymous's picture

Walkure: you are inciteful, and understand the American system well. In fact, the control is not isolated to the American markets. It is global and greedy. Even pursuing the smallest daytrader or the largest hedge fund. If you are the class bully, there are none who will not be victimized.

cartel
Definition
car·tel[ kaar tél ]car·tels Plural

NOUN
1. group of businesses controlling market: an alliance of business companies formed to control production, competition, and prices.

Mon, 02/22/2010 - 16:52 | 240638 Anonymous
Anonymous's picture

I hear Greece has has a great bond offering coming up.

Mon, 02/22/2010 - 16:55 | 240643 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 | 240645 Anonymous
Anonymous's picture

LOL...Bill Miller owns it all. Finally, averaging down
on crapola has paid off big time.

Mon, 02/22/2010 - 16:58 | 240651 Anonymous
Anonymous's picture

Looks to me that they are skimming the 401k monthly deposits from those who still have a job. Pump, 401k fund buys the top (they have to), deflate, repeat.

Mon, 02/22/2010 - 16:59 | 240653 Anonymous
Anonymous's picture

Too funny. HAL owns it all and nobody wants any.

Mon, 02/22/2010 - 17:03 | 240658 Anonymous
Anonymous's picture

c'mon don't be so hating 'em
sign the volume, get corr, ser corr, cross corr, lag it...
and make some real monies with us cool HFT traders fleecing the sheep
instead of whining 24/7

Mon, 02/22/2010 - 17:57 | 240718 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 | 240844 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 | 241154 Anonymous
Anonymous's picture

then go short Tripps

Tue, 02/23/2010 - 13:52 | 241800 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 | 305562 Tom123456
Tom123456's picture

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