Trading volumes this week are well below their recent averages and that means this comeback may be suspect.
When a stock has low trading volume, its price can rise significantly based on slightly good news, said Roberto Friedlander, the head of Energy Trading at Seaport Global Securities.Traders work on the floor at the New York Stock Exchange.The stock market's rally in the face of disappearing trading volumes brings to mind an old Wall Street adage: "Don't short a dull tape."
When a stock has low trading volume, its price can rise significantly based on only slightly good news, said Roberto Friedlander, the head of Energy Trading at Seaport Global Securities. This puts short sellers — traders who hold positions that benefit from a stock falling — in a bind. Meanwhile the Dow Jones Industrial Average rocketed more than 200 points higher on Wednesday, bringing its gain over the last five days to nearly 3%. Stocks fell on Tuesday into the close, but then quickly rebounded in the next session.
Contrast that with earlier last week when the main yield curve briefly inverted, an event many see as a reliable recession indicator. On the day the yield curve briefly inverted, more than 135 million shares of the SPDR S&P 500 were traded in one day.
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