Monday, August 15, 2011

Pump Down the Volume

Huge rain storm today here! Many streets in Cambridge were under water. Luckily the ride home was not too bad. No need to water the grass this week.

Pump Down the Volume
One of the things I really pay attention to is volume in the markets. Buyers and sellers vote with their feet and will run into or out of a stock at various points. One of the more frustrating things the "new" market since 2009 features is a real lack of volume, especially in uptrends. Zero Hedge had this headline up today that many were calling whining:
Market Stages Tremendous Rally.... On 40% Of Recent Volume
To be fair, all the heavy action the last couple of weeks was on very high volume so a drop off is not strange in and of itself.

So is volume important anymore? It's a good question. I still will base a buy on volume backing up something I see. With all the money that has left the markets over the past couple of years maybe volume is not that big a deal anymore. Surely as it relates to the major index trackers it's all but useless.

The rally from last Thursday to now has been large, but is there anything behind it? Here is a chart of HRL, note the volume at the bottom of the chart:
It is clear the recent bounce has come on less shares being transacted.

I wrote in my trading notebook (yes I still write stuff like in the dark ages) last Friday:
"Worst case is a huge bounce on no volume; not tradeable"
Yup, and here we are.

The chart for the S&P 500 shows the same, and note the levels I have marked off for the index as the moves seem to find old levels. This is where charting is helpful:
I had figured a close over 1200 would come this week and I was thinking of getting involved should it do so. Of course it did it today. Another V shaped blast off on the way? I would not be shocked, but this time the technical damage is so bad it would be far better and constructive for the market to base sideways for a time. A furious run up from here is not going to have a calming effect. Turnaround Tuesday is on tap, will see how it goes.

Robots On the Rise
My friend Mark seems to think his post tonight is funny, but it's just another sign of human handing the keys over to the robot overlords:
The Future American Worker
President Obama gave a speech at a robotics manufacturer and said:
"You might not know this but one of my responsibilities as Commander in Chief is to keep an eye on robots, and I am pleased to report that the robots you manufacture here seem peaceful, at least for now."
Total slip! He gave it away but acted like it was a joke!

Have a good night.


Jennifer Hillier said...

Glad you make it home in one piece.


Now whatcha gonna do?

study online masters degrees said...

Glad you're having such rainfall & here we are having no rainfall.

getyourselfconnected said...

JH, Oh hells no you didnt! Serious breach of blog protocol there.......

The Sovereign Bohemian said...

I appreciate your charts and explanations (thoughts). It helps a noob like me get my feet wet before jumping into the pool.

Also, liked the looks of those steaks you made Saturday. I'd be curious to discuss grocery prices sometime from what you pay back east to what I pay in the midwest. All I know is the prices are up this year and not my pay!

Last night I made a variation of your skirt steaks using chicken mushrooms, tho. And no shoestrings to tie them up. lol Used scewers and tooth picks. Also picked some blackberries and made a simple cobbler. I'll try to post it on my site. Haven't looked at the pictures yet, but bad pics haven't stopped me before.

We're getting rain here yesterday and right now...maybe it'll get to you a day or two. It's been good for cooling things off, and the garden.

Watchtower said...


GYSC, in addition to uttering the unspeakable, I heard she is also taking her book profits and building a robot sanctuary!

GawainsGhost said...

If you think you got hard rain up there, you have no idea.

Buddy, when I was a kid, it used to flood down here every year. And I mean flood. We're talking four or five feet of water on the streets all over town. Schools were closed for weeks at a time, because the buses couldn't run.

We used to get into canoes and paddle around like we were living in Venice.

The county had a poor drainage system, which wasn't upgraded until I was well into high shool. There were times I had to plow my car through water so deep it came up to the windows. I'm not kidding. But, hey, just keep your foot on the accelerator so water doesn't get into the exhaust pipe.

The problem is that this area, though it's called a "valley," is actually a river delta. That means all the land is below sea level. So when we get a hard rain, or God forbid a hurricane, the water doesn't drain off for weeks. In fact, there are still lakes, entire bodies of water, created by hurrican Buela in 1968. That was a year before we moved down here.

Anyway, about these markets. Up yesterday, down today. This is what I'm talking about, volativity.

I spent the entire afternoon writing ads. And you know what happens as soon as I submit them? Price changes. So I have to correct them.

This takes hours. I probably spend more time writing and correcting adds than I do driving around and inspecting houses. It's insane.

I'll tell you exactly what's happening in these markets, real estate included--uncertainty. Investors don't know what to expect, so they're either bailing out or sitting on the sidelines. Only a fool would buy into these markets now.

Everything follows real estate. Prices go up, prices down. I keep say that, because it's true. Wait till the economy of China, with all its empty cities and vacant buildings, collapses, as it inevitably will. Then you'll see a major market correction.

And precious metals? Yeah, right, the newest bubble blown. Unless you're investing in metals necessary for manufacturing things like computer chips, cell phones, or satellites, you're wasting your money. Believe me.

In real estate, the only investment to make now is in farm land. People do need to eat. Residential and commercial values are plummeting like a rock.

Oh, and by the way, I have to agree with Ms. Hillier about the Band That Shall Remain Unnamed. I've become increasingly fond of her as I read through her book.

getyourselfconnected said...

Lets not get crazy here folks!!!! See what you started JH?

Gawains, great points. Hope you like the book.