Concerns Over Stock Trading Volume

Trading volume traditionally shrinks over the summer months.  Market participants – whether the retail trader or the hedge fund manager – find more entertaining things to do than sit around fine tuning their positions.  You know, things like going to the beach, going to picnics, going to the zoo, etc.  A lot of ‘going to’ that doesn’t involve sitting in front of a trading screen. 

Now, on top of the normal seasonal dynamic, securities insecurities has a number of traders and investors sitting on their hands, too.  Could be a problem for those of us sitting on any kind of profit resulting from the recent market gains . . .

  • August 16, 2012, 8:19 a.m. ET

Stock Trading-Volume Drop Can’t Be Blamed Only on Summer

 By Sue Chang and Laura Mandaro

Trading in the stock market has slowed to a somnolent pace, even after accounting for all the traders and hedge-fund managers escaping to their vacation homes in the Hamptons.

Get used to it. Volumes could bump along at below-average levels for another three weeks, as investors hang on to recent gains and avoid making big moves before what is seen as the next catalysts–upcoming Federal Reserve and European Central Bank events.

On Wednesday, the volume of shares listed on NYSE Euronext’s (NYX) New York Stock Exchange totaled a paltry 2.64 billion, the fourth straight day with less than 3 billion shares changing hands and roughly 29% below this year’s average volume. The month’s average of 3.3 billion has dropped more than 40% from last August’s daily average.

It is no surprise August volumes look iron-deficient compared to a year ago. In August 2011, investor anxiety about Congress’ bitter fight over raising the debt ceiling and the U.S. losing a triple-A rating led to intense swings on the indexes and a surge in trading volumes.

But even compared to prior Augusts, volume has been slight. NYSE composite volume is on track for its lowest month since December 2007 and its lowest August since 2006, according to the Wall Street Journal’s data group.

For stocks listed on Nasdaq OMX Group’s (NDAQ) Nasdaq Stock Market, 1.52 billion shares traded on Wednesday, which is about 12% lower than the average for this year.

Aside from the usual summer doldrums, a lack of fresh incentives, consolidation in the wake of robust gains over the past couple of months and uncertainties over what, if any, action policy makers in the U.S. and Europe will take to jump-start their economies, are keeping investors mostly in the wings. . . . .   Read rest of article.

Friday, August 17th, 2012 News, Stock Trading, Uncategorized

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