Our resident chart expert, Jordan Kotick, Global Head of Technical Strategy at Barclays Capital tells why trading volume has been so low.
Q- Volume continues to be a concern for many investors. Simply speaking, it is not and has not been particularly strong.
What do you make of this?
A- If you had made your investment decisions based on volume, you would have missed the last 12 months of upside because as you say, volume has lagged, not been particularly strong. However, volume, always a key component for equities, is rarely black and white. It must be interpreted. Usually you want volume to trend with the market to confirm the move. But, after a stock market crash, volume tends to fall or at least severely lag for anywhere from 1 - 3 years depending on how you measure it. It happened in 1987, it happened after the crash from the Internet bubble and it is happening again.