Saturday, October 10, 2009

The Phony Rally of 2009: Markets Just Registered Lowest Volumes of the Year

This amazing stock rally of 2009 continues. The headlines say "Dow Jones closes at 12-month high." However, there is a problem: volume is disappearing. Volume Friday was the lowest all year. Please check the volume on the charts below on SPY, IWM, DIA, and XLF.

- SPY Volume: 135M Average: 183M
- DIA Volume: 6.5M Average: 11.4M
- XLF Volume: 60M Average: 102M
- IWM Volume: 34.6M Average: 47M

IWM and SPY are down about 26.3% in volume. DIA is down 42.9%. XLF is down 41.1%.

It looks like regular investors are not too convinced. Perhaps they lsot too much money are are just happy to sit on the sidelines. Maybe it's GS trading against GS on behalf of some clients since they report that they make tons of money in... trading? It is all very fishy.

(please click to enlarge)

The rally may well continue. Any postiotions are very risky. As usual, straddles may allow investors to profit either way.

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