No Vol And No Volume - Even The WSJ Questions Equity Melt-Up

Tyler Durden's picture

It’s encouraging to see that one mainstream media outlet questioning the recent market melt-up which wasn’t just notable for the lack of volatility, but also a severe lack of volume. The new normal seems to be “No vol and no volume”, although we saw a bit of a regime shift today, before the normal reversal.

The WSJ noted today that “Stocks continue to hit record highs, yet those pushing them there are trading less and less. The number of stocks and exchange-traded products changing hands in the U.S. and Europe has fallen steadily in recent months as ultralow volatility, a lack of market-moving news and the rising popularity of passive investment funds have kept many investors on the sidelines.”

The chart below of trading volume in both regions is ugly, to say the least, especially in Europe where it’s the lowest in five years. Aggregated trading volume for NYSE, NYSE American, NYSE Arca and the NASDAQ this month is reported to be down 12% versus the average for the year and 22% below last year’s average. It’s become so bad that even ETF trading is 8.5% below last year.

No vol(atility) is causing no vol(ume) the WSJ concludes “The collapse in trading volumes is closely tied to the recent fall in volatility, where measures of daily stock price movements have plumbed multiyear lows. When markets aren’t moving, there are typically fewer people scrambling to protect their portfolios against further losses or seizing an opportunity to buy things that look cheap.”

Indeed, spare a thought for the sceptics who haven’t even had a “proper dip” to buy into recently. “Ed Campbell, a portfolio manager at QMA, a multi-asset business of PGIM, said he spent most of the summer holding a bit more cash, ready to buy stocks on an anticipated dip in the market that never materialized. ‘Things looked overextended and due for a pause…but summer came and went and that never really happened,’ he said. In September, QMA decided to give in to the onslaught of upbeat economic data and slowly add more positions in banks and small-cap stocks instead of embarking on a bigger buying spree.” According to Phil Orlando, Chief Equity Strategist at Federated Investors “there’s no need to make radical adjustments in your portfolio, so as a result you’re just sort of riding on what you have.”

As to what it means, the WSJ isn’t sure. It’s definitely bad news for banks and it might be bad news for equity investors, unless they’re so bullish they simply refuse to sell. “Some investors are mulling what the drop-off says about a global equity rally that has lifted many markets, including in the U.S., to new highs. The muted trading could signal that investors are holding back amid skepticism that stocks have further to climb—or that they are so confident they feel no need to sell. Either way, the decline in equity volumes is another piece of bad news for banks, already beset by a steep falloff in fixed-income trading revenues.”

Then again…maybe all those who were going to buy have bought and those who think it’s merely a bubble created by the central banks have left it too long to overcome their cynicism. This appears to be the view of Randy Frederick, vice president of trading & derivatives at the Schwab Center for Financial Research. “Many people are already in the market, and if things they own are going up and making money, there’s no reason to sell,’ Mr. Frederick said. ‘And if you were sitting on cash, coming in now is pretty late to the game.”

If that’s the case, we might be running out of buyers, but does it leave a few shorts who’ll still need to cover?

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jamesmmu's picture

Melt up with no sellers, yes not health, but its real and crazy. computers to blame, but what can you do about it? 


CPL's picture

Nothing but grab a deck chair, something cold from the fridge and watch the dreams of an entire planet vapourize because they were stingy jews.

OpenThePodBayDoorHAL's picture

These people have no idea what they're looking at, for centuries money and markets were two separate things, you used money to buy things (or stocks and bonds) at markets. Now we have centrally-planned and issued business participation notes instead of money, and we have curiosities like the BOJ who issues forth a thing (a JGB) and then buys it from itself, with no other buyers in sight.

Reminds me when the first Brits stepped ashore in Australia, they pointed to an animal and asked the locals "what is that thing?" The locals responded with the word for "I can't understand what you're saying". That word is "kangaroo". Lost in translation, just like every "market" pundit today trying to translate what he learned looking at something for 30 years, when now he's looking at something entirely different and doesn't even know it.

pickatheweek's picture

Lipstick on a pig sound like a good description?

ParkAveFlasher's picture

Never has "joy" been so lacking in this country.  The joylessness is palpable.

wet_nurse's picture

They take joy in the wrong stuff. Babylon is falling, it's dope to watch.

ParkAveFlasher's picture

His justice is pure, and straight.

CPL's picture

Magic of course.  Magically melting all the way to zimbabwe level inflation.  It'll be beautiful.  Ex-elites eating cat food out of a tin can with a stick.

-Cackling intensifies-

Ben A Drill's picture

30 year anniversary baby that’s why.

CPL's picture

Well 1990 was only 67 years ago.

jamesmmu's picture

DOW jump every time ZH writes a new post, not sure if its related.

Callz d Ballz's picture

"lack of market-moving news"

Ummm, no, you guys just don't cover shit.

Fantasy Free Economics's picture

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Surprised at the meltup on low volume? I am not surprised in the slightest.


Low volume is a critical ingredient necessary for goosing the market. As is low volatility.

QE4MeASAP's picture

Too late to say green by close?

NEOSERF's picture

Green in 3, 2, 1....unless the day starts out at about 250 down, it has little to no chance to end red.

pickatheweek's picture

C'mon you can do it Janet! aaaaaaaannnnnnnnnddddddddd IT'S GREEEEEEEEEEEEEEN!

NEOSERF's picture

Market actually looks embarassed to go green...can't get over that last .4 pts

NEOSERF's picture

Embarassment on to +30 on the day for A NEW ALL TIME RECORD!!!!

jamesmmu's picture

If you look at the chart today, it looks exactly like what DOW did in the past 8 years, bounce from the 2009 low and keep straight up and up.

Games Without Frontiers's picture

Did central banks stop printing paper?

wonger's picture

short dow 23155, feel free to now sell off

wonger's picture

I dont think we will see 23175 ever again

Tolomeo's picture

They did it! Oh, no... Ir’s red Again... C’mon, 14 minutes to close! Amazing!!!

wonger's picture

Im staying up tonight, i can smell bear action overnight in asia session

surf@jm's picture

Its as if the Bureau of labor statistics is now publishing the daily DOW level......

Games Without Frontiers's picture

It's central banks pushing freshly printed currency into markets the world around. That's why there's no volume and no volatility, just a constant flow of freshly printed cash. Central banks are the markets.

venturen's picture

why even have a market....just print money and give it to the richest 10%

bardot63's picture

I can bring this market down overnight.  Not hard at all to do.  All I have to do is put 10 grand in an S&P fund.  The market will tank 60% within 24 hours and continue tanking until long after I'm dead. 

Not if_ But When's picture

PPT at the NY Fed buying desk.  Just enough to end any downdraft.              CPL593H