Volume has been one of the most impressive indicators in the markets recently. In fact, it has been since probably about May 2009 and continues to be today. As a Chief Market Strategist, I have noted day in and day out that when volume is over 200 million on the SPY, the markets and down significantly while when it is under 200 million, the markets are flat or higher. What does it mean? Essentially, when volume is light there is no participation or very little participation from institutions. Human psychology is naturally positive. Think of it this way, if as a human, you are not positive in your life you will generally be medicated (anti depressants) to be positive. Therefore, if volume is light and the average person is the only participant, then the markets will generally float higher. Scan the markets, any day that the volume is lower than 200 million on the SPY, the markets will be flat or higher. Note any major down days are on much higher volume than 200 million on the SPY. Truly amazing and a testament to the psychology of the markets.
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