Stock trading hits a year low, is this an inflection point?
Posted on 10 August 2010 with 1 comment from readers
US stocks managed meagre gains on Monday but the important thing to note was that the lowest volume of shares changed hands in a year. That hardly indicated much confidence ahead of the Fed meeting today.
Just 790 million shares exchanged hands on the New York Stock Exchange. It was the lowest share volume recorded on any day in 2010. Tiny Dubai used to trade more volume in the boom times.
Rate decision
Commentators pointed to the FOMC decision on rates today as the main reason that traders opted to stay dormant. The consensus view is that the FOMC will keep its target rate in a range of zero to 0.25 per cent. But there is a worry that the Fed might change the wording of its statement.
The stock market could edge higher on promises of more quantitative easing, reasoning that this new money printing will chase stock prices higher. However, inflation is bad for profits and thus ultimately for stock prices, even if this is not the knee jerk buying impulse.
On the other hand, last Friday could have been an important inflection point in the market, and yesterday’s super low volume a pause for thought before a bigger sell-off.
1 Comment posted by readers:
Another “The Apocalypse Is Nigh” article by Wall Street (and US Marine Corps Korean War) veteran Paul B. Farrell on the MarketWatch web site. Your gold might come in handy, Peter. Mr. Farrell has been singing the same song for months now. Somehow, I doubt that the unusually cold and foggy weather on the US West Coast this summer is the cause of his pessimism.