#$volume

[jeffhirsch]

Summer Doldrums Have Arrived - Market Volume Likely to Continue Fading

In a typical year, barring any external event triggers, trading activity typically begins to decline around the July 4th holiday towards a summer low usually in late August. We refer to this summertime slowdown in trading as the doldrums due to the anemic volume and uninspired trading on Wall Street. Fading summer volume is also why many summer rallies tend to be short lived and can be quickly followed by a pullback or correction.

Click here to view chart full size…

Click here to view chart full size…

Above are plotted the one-year seasonal volume patterns for the NYSE since 1965 and since 1978 for NASDAQ against the annual average daily volume moving average for 2024 as of the close on July 5, 2024. The typical summer lull is highlighted in yellow. After spiking around quarterly options expiration and the end of the first half of the year, trading volume has been retreating in typical seasonal fashion. A prolonged surge in volume during the typically quiet summer months, especially when accompanied by market gains, can be an encouraging sign that the bull market will continue. However, should traders lose their conviction and participate in the annual summer exodus from The Street, a market pullback or correction could quickly unfold.

[annemarietrades]

A Look at the Nasdaq Minis as Buyers Test Support

Wondering About Nasdaq Strength Progressing?  These Images Tell the Tale

Above we see the passage of the last five days in the $NQ_F, the mini NASDAQ futures - against a backdrop of the month’s volume. Instead of candlesticks, we are looking at the volume associated with price.  

The NQ_F chart here tells me that I am sitting near solid regions of new higher support holding but I have congestion areas above holds steady as resistance even as we press through to higher levels.  Thin volume below still poses a problem that will surely raise its head in the future as a problem but as it sits right now, pullbacks remain buying opportunities for most participants in the market.

So how did I get this information from the chart we see?

We might notice in these mountainous formations, the peaks and valleys present each day.  What they represent is a participation level in terms of volume.  From these images, we are able to say with quite a bit of surety that if I drift into the regions near the higher peaks, I am likely to stay there for a while.  It will chop or grind through those levels on its way to the next ones.

When traders behave this way, they agree that the instrument is near a price at which traders desire to participate - usually in both directions.  

In the spaces where we see the valleys, we are likely to lift (or fade) through these regions quickly when we approach them.  When traders quickly move away from a price it means that it has created a space where the level of participation becomes one-sided (again, either direction is possible), creating directional motion.  These are my favorite places to identify as a trader as they can give me swift movement in participation.

Knowing these two pieces of information can help you see how to both enter and manage your trades a bit better by realizing what the likelihood of behavior might be with other traders.

As always, manage your risk - the is the most important thing you will do as a trader - it will provide the road for longevity, which is the only true measure of success in this business.