Since early February, volume (number of shares traded) in the S&P 500 stocks declined slightly as the S&P went up. That’s unusual. As the market corrected and went down, volume stayed flat. As I commented a while back, that is unusual too. When the S&P goes down, we expect selling volume to increase. This time it didn’t.
A rather arcane statistic that I keep on volume and price fell today. That happens well after a correction is over so I don’t even use it as a buy-side indicator. That’s unusual.
Maybe this time it really is different.
If we just think about what is going on, flat volume means we are sort of directionless. It may be simply that the traders don’t know which way to go and Mom & Pop investor are waiting on the sidelines.
Looking at NTMS analysis, we can see that recently more volume has been to the down side, but not by much. A big up day or two would reverse that indicator. Since we are currently in a Neutral/Hold position, it is possible that it could switch to Buy fairly quickly.
So, based on the uncertain conditions (or at least less certain than usual), I closed out my short position in the trading portfolio today for about a 5% gain. I can always re-establish the position if things go downhill. Those 2x funds are brutal if you get caught on the wrong side of the trade.
NTSM analysis is a HOLD today.
I am still conservatively positioned with only 30% invested in stocks.
