A surge in exchange traded fund trading this week signals that investors should buckle up for a volatile summer.
ETF trading as a percentage of overall stock-trading volume tends to skyrocket in headline-driven markets, and particularly when fear trumps greed.
ETF trading soared to about 40% of overall volume on Thursday, one day after Federal Reserve Chairman Ben Bernanke said the Fed may soon begin tapering its purchases of $85 billion a month of Treasury bonds and mortgages. The Dow Jones Industrial Average plunged 354 points.
"My ETF-monitoring screens were lit up like a Christmas tree," said Chris Hempstead, director of ETF execution at WallachBeth Capital, in a daily update Thursday. "Almost every ETF on my radar was trading at multiples of a normal day's volume."
(Read More: Is the Global Market Selloff Just an Overreaction?)