From Peter L. Brandt:
As shown in the charts below, the volume on the rally that began in late December has been on incredibly light volume. Volume always dries up around Christmas and New Years, but then expands immediately in January. Not this year. As shown on the weekly chart, we have six consecutive weeks in Nasdaq futures with volume below 900,000 contracts. We have to go back to the decline in 2001 to find volume as light.
There are all kinds of theories being advanced to explain this volume. Let me advance a theory based on a common understanding of basic technical principles:
A market moving into new high ground on light volume MUST NOT be trusted. While one cannot fight price action itself, the facts that the market is reaching serious overbought readings on such light volume is NOT a constructive situation.
It is worthy to note that the same contraction in volume is occuring in...
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