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Tuesday, July 17, 2018 8:03:46 AM
Fading volume indicates arrival of summer doldrums
By: Almanac Trader | July 16, 2018
The “Best Six/Eights Months” for stocks are over and it also looks like the summer doldrums could be right around the corner. We refer to the summer months as the doldrums due to the anemic volume and uninspired trading on Wall Street. The individual trader, if they are looking to sell a stock, is generally met with disinterest from the street. It becomes very difficult to sell a stock at a good price. That is also why many summer rallies tend to be short lived and are quickly followed by a pullback or correction.
Below we have plotted the one-year seasonal volume patterns since 1965 for the NYSE and 1978 for NASDAQ against the annual average daily volume moving average for 2018 so far. The typical summer lull is highlighted in yellow. Note the spike in volume that occurred in late June as the market began to weaken after mid-month. The recent volume trend for the current year shows a perennial trail off in volume may be underway.
An atypical surge in volume this summer, especially accompanied by outsized gains, would be an encouraging sign that the bull market will continue. However, should traders lose their conviction and participate in the annual summer exodus from The Street, a market pullback or correction could quickly unfold.
http://jeffhirsch.tumblr.com/post/175959203563/fading-volume-indicates-arrival-of-summer-doldrums
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By: Almanac Trader | July 16, 2018
The “Best Six/Eights Months” for stocks are over and it also looks like the summer doldrums could be right around the corner. We refer to the summer months as the doldrums due to the anemic volume and uninspired trading on Wall Street. The individual trader, if they are looking to sell a stock, is generally met with disinterest from the street. It becomes very difficult to sell a stock at a good price. That is also why many summer rallies tend to be short lived and are quickly followed by a pullback or correction.
Below we have plotted the one-year seasonal volume patterns since 1965 for the NYSE and 1978 for NASDAQ against the annual average daily volume moving average for 2018 so far. The typical summer lull is highlighted in yellow. Note the spike in volume that occurred in late June as the market began to weaken after mid-month. The recent volume trend for the current year shows a perennial trail off in volume may be underway.
An atypical surge in volume this summer, especially accompanied by outsized gains, would be an encouraging sign that the bull market will continue. However, should traders lose their conviction and participate in the annual summer exodus from The Street, a market pullback or correction could quickly unfold.
http://jeffhirsch.tumblr.com/post/175959203563/fading-volume-indicates-arrival-of-summer-doldrums
• DiscoverGold
Click on "In reply to", for Authors past commentaries
Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Your Due Dilegence is a must!
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