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WHERE'S THE VOLUME?

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Friday's higher prices continued the market rally that started the previous Thursday. The three charts below show major market ETFs all back above their 200-day moving averages, which removes any immediate threat of a bear market. All have recovered more than half of their July/August decline, The Dow Diamonds and the S&P 500 SPDR are now in position to test their falling 50-day lines. Since a market bounce that could last two to four weeks was expected, this week's bounce doesn't tell us if the worst is over or if there's another downswing to come (that could at least retest the recent lows). One important thing missing from the rally is volume. All three charts show remarkably light trading this past week. In fact, today's trading was the lowest since the days surrounding the July 4 holiday. Chart 3 shows the PowerShares QQQ Trust (QQQQ) closing slightly above its 50-day line today. Unfortuntely, that also came on unusually low volume. Low volume tends to exaggerate price moves and shows little buying enthusiasm. That's especially true on a Friday afternoon in August.






Chip Anderson
About the author: is the founder and president of StockCharts.com. He founded the company after working as a Windows developer and corporate consultant at Microsoft from 1987 to 1997. Since 1999, Chip has guided the growth and development of StockCharts.com into a trusted financial enterprise and highly-valued resource in the industry. In this blog, Chip shares his tips and tricks on how to maximize the tools and resources available at StockCharts.com, and provides updates about new features or additions to the site. Learn More
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