Stop blaming summer: volume really IS light. The S&P 500 is at a one-month high and is only a few points from breaking above its 200-day moving average.

So why does it still feel quiet? Low volatility (the VIX is near its lowest levels since the May 6 Flash Crash) and low volume.

Volume was lighter than normal for August, and so far it is also lighter than normal for September. How much lighter? In the first 5 trading days, September consolidated trading volume at the NYSE was down 31 percent compared to the same period last year. August volume was also 31 percent below the same period last year.

Why? Look at who does the trading:

1 ) High frequency traders are 56 percent of all trades. This includes proprietary trading shops, market makers, and high-frequency trading hedge funds, according to Tabb Group. But as volume and volatility drops, this group gets less opportunity to profit from the statistical arbitrage trades most of them do.

2) Institutional traders (mutual funds, pensions, asset managers) are 17 percent of the volume. They, along with retail traders using their own account (11 percent) are seeing less activity because average investors have been WITHDRAWING money from equity mutual funds for two years.

3) hedge funds (15 percent of volume) have also been trading less because stock picking has not been very effective this year — it's been mostly about getting the macroeconomic direction right.

What will change this trend? A series of notably stronger economic reports, and a major macroeconomic event.

Did 'Quote Stuffing' Cause the Flash Crash?

Brokers Face Fines Over Role in Flash Crash

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