The equity market produced a remarkable run in 2009. It left quite a number of us scratching our heads given the underlying global economic fundamentals. A full bottle of Selsun Blue could not remove the urge to scratch. There are ample “experts” and analyst pundits paraded around all day, every day on CNBC. They are giddy about a “V” shaped recovery so I will not even bother taking the other side of a less than bullish perspective regarding true and accurate economic fundamentals. Note to self: these are the same experts and pundits that remained bullish the entire way through the lost decade of the equity market.
An interesting fact is that this monster rally occurred with a precipitous drop in volume. Even the pundits might sneak a head scratch to explain the lack of commitment based on trading volume.
On July 10, 2009, the 3 month daily volume average for SPY was 245,300,000 shares. On January 5, 2010, the 3 month daily average was 165,218,000. This is an 80,000,000 daily share reduction.
During this same period, the S & P 500 went launched from 879 to 1136 (257 points or 29%). This is a 29% increase in just under 6 months. The market needs a blood test as steroids are likely present. One can’t help but continue to scratch the annoying itch given the average daily volume of SPY experienced a nosedive of 32.6%.
I for one wonder who is running this race as given the lack of volume (a.k.a. lack of commitment), this has been one hell of a sprint on one leg.