Internal Cracks Are Showing In The Market - Low Volume Highs

Tyler Durden's picture

Via Dana Lyons Tumblr,

Stocks have recently witnessed an unprecedented cluster of new highs occurring on negative volume.

A number of stock bears have pointed to the supposed thin nature of the rally in justifying their skepticism. That is, the rally has been led by a relatively small number of stocks as opposed to broad participation. While we have seen anecdotes of such a condition, we can’t say that we fully subscribe to this concern. Factors such as the NYSE advance-decline line hitting new highs along with the various market cap indices, from small-caps to large-caps, also at new highs undermine the argument, in our view.

We will say that some of our proprietary breadth measures have not supported the recent rally. When such divergences have occurred in the past, stocks have eventually dropped, confirming the signals of our indicators. However, the timing of such a reckoning can be difficult. Outside of that condition, as we said, concerns about breadth have been mainly of an anecdotal nature.

Today’s Chart Of The Day is also best classified in the anecdotal category, though perhaps a little more alarming than some of the recent “warnings” that we’ve seen. It deals with a recent odd spate of new 52-week highs in the S&P 500 on days in which declining volume on the NYSE actually exceeded that of advancing volume. There have actually been 6 such new highs in the past 3 months.

If that doesn’t seem like a big deal, it is actually a record number of such days within a 3-month time period. In fact, it is double the previous record number of 3.

So, how much of a warning sign – if at all – is this recent phenomenon? Going back to 1965, there have been plenty of these occurrences, e.g., the latter 1990′s and 2013 that failed to lead to any negative consequences whatsoever. However, most of those were isolated events.

The recent cluster of these days is, again, unprecedented and may signal a bigger warning sign for the stock rally.

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If you want this “all-access” version of Dana's charts and research, he invites you to check out his new site, The Lyons Share.

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Too-Big-to-Bail's picture

I think I will wait for the FED to reassure me with more optimistic manufactured data especially when delivered by Sweet Old Grandmother Yellen

Stormtrooper's picture

Yes.  A nice cold glass of milk and some of granny Yellens home baked chocolate chip cookies makes the world seem like a benign place.

Creepy_Azz_Crackaah's picture

"Cracks Are Showing In The Market"

This is what they said last year.

And the year before that...

And the year before that...

And the year before that...

And the year before that...

And the year before that...

And the year before that...

PlayMoney's picture

The quadrouple adjusted GDP made me feel quite serine.

chosen's picture

What is "negative volume"?  I always thought volume was number of shares traded. Seems to me volume has to be zero or positive.

Ghost of PartysOver's picture

My guess is Volume(Rising Stocks) - Volume(Falling Stocks).  But that is just a guess as I have never heard the term before.

all-priced-in's picture

The number of stocks with a price drop > the number of stocks with a price incease.





Chief Wonder Bread's picture

It looks like maybe the scale on the right is a ratio,

6 times more stocks show declining trading volume than rising volume on the NYSE?

Also, what time frame? Daily? Weekly? I have a mild interest but this is just to sell his stock charts.

silverer's picture

I found this, for what is volume:

The total amount of transactions observed in a specific marketplace over a specified time frame. Market volume data can be obtained for application toward various business purposes from primary sources like organized markets and exchanges, or from secondary sources like large retailers, surveys and research organizations.

As for your question, I found this:

DEFINITION of 'Negative Volume Index - NVI'

A technical indicator that relies on changes in a security’s volume to identify when smart money is driving the current trend. The Negative Volume Index suggests that unsophisticated investors buy and sell primarily on high-volume days, while shrewd investors are more likely to trade on low-volume days. The concept was developed by Paul Dysart in the 1930s and later refined by Norman Fosback.

chosen's picture

Thanks.  It is a change variable, so I understand it now.

Francis Marx's picture

Ahh..I guess then is someone sold off a billion or so, Flash crash?

Squid Viscous's picture

AMZN $25 off the low. after missing earnings by a mile.


buzzsaw99's picture

so a btfd opportunity is nigh?

Grandad Grumps's picture

There is no market. Price is 100% contolled by the banks.

Clowns on Acid's picture
All analysis today is only relevant since 2010 / 2011 when the Bolshevik Federal Reserve went full Zimbabawe and printed  5 Trillion USD and probably more for European Banks.

For the first time in history mind you....going back to the Roman gold and silver coin debasement. So that period of market analysis maybe helpful.

All analysis before 2010/2011 is now irrelevant.

Sudden Debt's picture

Anybody seen this? I've seen this on 3 bitcoin exchanges!


In the light of recent events surrounding Segwit2x and the Bitcoin Cash (BCC) hard fork, the industry leaders have decided to take precautions by halting trades, deposits and withdrawals to ensure that the users funds remain safe.
In order to comply with the current security standards, applied by leading Bitcoin services, we will temporary halt our service to ensure that your balances remain safe at all times.

silverer's picture

WTF? See. Bitcoin. The concept is wonderful. But so many things are cropping up that can affect it.

"If you can't stand in front of it and defend it with a firearm, then it's not yours and probably never was."


H H Henry P P P Paulson's picture

I'm long TVIX.  After 8 years, it is finally time.

Traderone's picture

Imagine how high we go when the volume does come in. 

silverer's picture

I was hoping to get the Star Trek klaxon horn when I clicked on that photo. Damn.

World citizen's picture

Ahun, this happens EVERY summer anytime between June and August... low volumes, big price oscillations without any particular reason... nothing even close to something new...

francis scott falseflag's picture

Low volume highs, eh.    Somebody cornered the market.

If the Fed goes to zero percent margin, that ought to do the trick.


Unless it was the FED that cornered the market, then we'll

have to try sumping else.

francis scott falseflag's picture

There was a HFT traders convention in Vegas all week.  When they

get back to work, volume will return.  Scout's honor.