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A Ramping Market On Disappearing Volume: Volume-To-Price Correlation of -.81!
If you want to ramp the market, do so on low volume days when your strategy is the dominant marginal price maker. Enter Exhibit A.
It is no surprise, yet is should be a total shock, that the correlation between market volume and price moves has gotten to a 7 year low of -0.81!
Aside from a few machines that allegedly provide liquidity yet really just buffer the complete lack of volume, nobody has been buying into the rally. Statistically - this amount of incredulity was last seen in 2002. And in the absence of real buyers and sellers, gunning the market is easier than taking candy from a baby... and avoids those 202 caller IDs.
Another way to describe the data: large volumes on major down days, nominal volumes on increasingly lighter up days.
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This is what the chucky schumer flash-thingy is about. They need bag holders.
Another misinformed soul. Flash orders represent only 4% of market volume.
Link please.
Here is the link.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aO8DoToaITO8
While I was looking for the link, I came across two more sources that estimate the volume of Flash orders to be in the 2-3% range of total market volume. Take your pick, but as you can see it is rather small.
http://online.wsj.com/article/SB124940289965505053.html
http://www.wtop.com/?nid=111&sid=1732671
I'm not saying you're wrong, but the same sort of statistics were presented when oil was over $100/barrel and people were saying that speculators weren't driving up the market and that they were only a small portion. Either way, 4% or 40%, it shouldn't exist.
It looks like once someone large enough decides to take profits, your average 401K holder will experience super fun time (yet again.)
I'll just focus on risk management and keep practicing my duck and cover technique. However this time around, I expect shit to hit the fan from abroad first...
A DIRTY HARRY STOCK MARKET
Stock market to shorts: "I know what you're thinking. "Did he fire six shots or only five?" Well, to tell you the truth, in all this excitement I kind of lost track myself. But being as this is a .44 (Goldman) Magnum, the most powerful handgun (market pump) in the world, and would blow your head clean off, you've got to ask yourself one question: Do I feel lucky? Well, do ya, punk? "
No
I do. Risk is ALWAYS part of the game. And once you forget that fact, you get exactly what you deserve - mediocre long term results.
The new GOLDMAN Modus Operandi--
"STEALTH WEALTH".....
"Shhhhhh......It's OK to steal from the Taxpayers, just make sure you don't SHOW them you are doing it"!!!!
(HAAAAAAAAAAAAA Wow Lloyd- you just suck at this PR thang, you REALLY DO.
http://www.cnbc.com/id/32284889
In case you might actually have a life, and missed it Gasparino was on CNBS a bit ago saying something to the effect of
*crying belligerently*
LEAVE GOLDMAN ALONE!!!
Major down day?! hm... let me see, nope I sure don't recall any major down day of late... Although I agree with you on day to day basis where during intra-day trading you always see big volume on down candle and small volume on up candle...
You may never see one again.
18 days, 130 or more S&P points from the low to the highs and no real pull back.
Investor's Daily: "Last week the Vickers Weekly Insider Report listed current insider selling at 4.16 to 1. That means more than four times as many shares owned by insiders are being sold than bought. The last time this indicator was this high was the beginning of one of the biggest sell offs in history, October 2007, the top of the 2002-2007 bull market."
Thanks, I was trying to find that info, just didn't know where
Yeah sure. We will see a big selloff when Q3/Q4 GDP will be +2-3%. Dream on
You aren't alone in thinking this. It's not such a sure thing.
The treasury has already reduced their debt offerings, so they will be spending less. Given that most state and local governments are on the verge of bankruptcy, they won't be spending either.
The dollar is depreciating, meaning imports will rise. No one is buying exports.
U6 is 17%, consumer spending won't be up.
So GDP is entirely relying on investment growth, where we're at 67% utilization and dropping.
Reduced?
I thought they were 403, 436 and 460 billions in Q1 - 3 resp. Approx nums off top of head...
let's be careful about that u-6 number it's bad
by any measure but in terms of buying power
who is really unemployed / under-employed....
does 17% represent 17% of pce meaning that
unemployment is distributed evenly across all
income groups or is it concentrated in the lower
deciles? if so, no one will give a flying fuck
about unemployment....if 17% is concentrated
in the upper mid and upper deciles govt folks
will panic....
Don't forget that lately bonuses and other forms of compensation have come via stock distribution to employees. So you really need to look at the overall holdings of insiders. It may have increased to the point where the selling ratio doesn't mean anything.
statistics you can believe in.....
this is the kind of data of which more is needed.
Regular people will not move their savings into mutual funds or stocks until the coast is clear and people are back to work. That won't happen until the end of 2010. So until then, just forget it.
WHAT NONSENSE - ZH IS A DINOSAUR
T-REX IN DA HOUSE!
WOOT!
A rising equity market is a self fulfilling prophecy. The wealth generated over the last few months is a nice plug to many retirees 401(k)s. The higher the market goes, the more green shoots and consumer recovery you will see. Not that it helps out the poorest citizens very much, but Obama is helping them out anyway.
The higher the market goes, the more green shoots and consumer recovery you will see.
I have a problem with this kind of thinking. If the stock market is going up because of rising commodity pricing, then how exactly does that help consumers? They'll pay more for everything.
Am I wrong? If so, please enlighten me.
it's not consumer friendly but is somewhat
earnings friendly in terms of immediate
gratification....those who have pricing / wage
power win.....those without lose....
all markets will revert to the mean.....watch
standard deviations away from key trends and
then anticipate as imminent a snapping point
when 3 or greater is reached.....
the stock market is currently asynchronous with
the economy....but be careful about which time
lag.....there is some positive correlation with
market change and future gdp but only within
normal trend bands....i think the market is
currently way out of synch so discount the positive
correlation.....
someone needs to show that economic and earnings
growth will be strong over the next 4 quarters
to justify current p/e OR show that alternatives
suck even more....still, to be so heavily invested
with poor roi is foolish....
OK, chief. But answer me this:
1. While it is true that it is better to be down 30% YoY than 50%, how does being down ONLY 30% inspire sustainable economic progress?
2. If what you say is true, why do we need Cash for Clunkers, Matches for Mortgages and Currency for Crack and whatever other waste of money Congress is going to think up next to encourage people to releverage?
The fact of the matter is, you're clueless.
Actually, I don't think he is clueless. I think he is simply saying it is a self fullfilling prophecy -- more begets more. I don't think the poster was talking to the flaw in this logic -- just saying that is the case in the short term. Long term nothing replaces producing more than consuming.
Problem is most of the PI's sold the market in March and gave up.
That's right and this market must keep going up until it pulls the greater fool/odd lotter back in.
If the market is so easily manipulated up, then that must hold true on the way down.
How do we know, or how can we confirm when the time comes that we're being
bilked in the other direction?
P/E's should give you some clue as to which direction we are being bilked.
Wonderful graphic.
--BSD guy
Tyler, the chart you present clearly shows the market goes through periods in which the correlation oscillates. My rebuttal is, so what?
"so what"!! Such piercing logic, presented with the most scintillating of vernacular. Oh, TD, beware this anons rapier wit at your own peril.
-.81?
Are u stoned?
Go read CNBC.com, you have no business here if you cannot see what it means.
Go read CNBC.BullShit?
Get a clue!
-.81
I'm not really sure what this mean either. Please educate my ignorant ass.
And please don't refer me to some sugar glazed candy channel like CNBC. I get better financial information from Little Opie on crack.
Correlation, -1 would be perfectly negatively correlated. One goes up, the other goes down.
Peace.
when you are not reading little opie on crack
read statistics for dummies (no offense)
high volume tends to correlate with a drop in
the index over the time period under consideration
+/- .81 is a hugely large correlation coefficient....
i wouldn't dare claim causality but it is so
significant to warrant intense inspection....
It appears that volume and price are persistently negatively correlated. How about period of time prior to 2002???
moot question for the purposes of this discussion.....
negative correlation for this time period is
all that matters....basically no one but a
few sparc stations are buying the green shoots
theory...
i surmise that people are a hopin and a wishin
that the market gets high enough to where they
can bail....but as the trends show, if done
in significant volume they fall through a trap
door.....
and ABC consumer confidence just released is -49 lower than 'expected' -47 and last reported was also -47
but of course futures are gunned up as usual
...the near end of the equity rallye is coming...
How do I include pictures in my post? Awesome stuff Tyler.
Sorry to post again. It looks like the previous low was in 2001 right around 9/11.
Great stuff Tyler. Its good to see you get the accolades - even if it is from another corner of the indie underground.
-In Debt We Trust
but if you look at longer term graph correlation has been consistently negative for more than 10 years now and we are not at the bottom yet