Where Did All the Trading Volume Go?
2012′s trading volume went from a state of sluggishness, to something closely resembling comatose, with a slow and unsteady pulse that only serves to reassure analysts it's still alive.
Indeed, market volume has been on the decline for some time, but this week's activity has still been surprisingly lifeless.
Consider that Monday's NYSE volume was the lowest non-holiday trading day volume in over a decade. Tuesday's trading volume was 50 million shares greater than Monday's, disappointing conservative estimates of 100 million shares higher.
It's still unclear what's going on in the market to make trading volume so anemic. But as a start, or maybe a clue, we repeat what UBS floor trader Art Cashin shared in an interview with CNBC:
Tuesday's anomaly was caused by two somewhat unusual things. The first was a slight slowing of the trading rate between 2:00 and 3:00. The run rate between those two hours is normally very consistent. Any changes are almost always the result of some news event. Yesterday, there was no news that we could find. A bit strange.
The other anomaly was not quite as rare. It was simply a disinterest in market on close orders. The normal runoff in those orders averages 100 to 150 million shares. Yesterday, it was barely 50 million. Trading geeks (like yours truly) follow such things.
Business section: Investing ideas
Curious which companies are bucking the low-volume trend?
We created a screen on companies that have a three-month average trading volume above 1 million shares. Then we looked for companies that are trading well above that average and how much the high volume affected share price.
We do this because when increased activity surrounds a stock, it means more people are essentially voting on the stock's value. If prices are moving up while volume is increasing simultaneously, it indicates investors feel the stock has more to price in. When a stock is in an uptrend or downtrend trend but trading volume is declining, it's a sign the trend is losing its momentum.
These companies have been receiving a lot of attention from investors for various reasons -- such as earning surprises, industry trends or breaking news -- do you think they will continue on their current trend? (Click here to access free, interactive tools to analyze these ideas.)
1. Western Union: Provides money transfer and payment services worldwide. Market cap of $10.98B. On Wednesday the company traded 37,417,584 shares, 7.23 times its average trading volume. Share value changed by -10%.
2. OCZ Technology Group (NYS: OCZ) : Designs, develops, manufactures, and distributes computer components for computing devices and systems worldwide. Market cap of $314.67M. On Wednesday the company traded 12,286,892 shares, 7.03 times its average trading volume. Share value changed by -2.34%.
3. OpenTable (NAS: OPEN) : Provides restaurant reservation solutions in the United States, Canada, Mexico, Europe, and Asia. Market cap of $1.08B. On Wednesday the company traded 7,137,931 shares, 6.84 times its average trading volume. Share value changed by -11.76%.
4. Level 3 Communications (NAS: LVLT) : Engages in the communications business in North America and Europe. Market cap of $4.43B. On Wednesday the company traded 9,189,037 shares, 5.91 times its average trading volume. Share value changed by 8.78%.
5. Computer Sciences (NYS: CSC) : Provides information technology and professional services to governments and commercial enterprises. Market cap of $4.87B. On Wednesday the company traded 13,912,363 shares, 5.84 times its average trading volume. Share value changed by 18.54%.
6. Apollo Investment: Operates as a closed-end management investment company. Market cap of $1.40B. On Wednesday the company traded 12,414,236 shares, 5.74 times its average trading volume. Share value changed by -10.45%.
7. Annaly Capital Management (NYS: NLY) : Engages in the ownership, management, and financing of a portfolio of investment securities. Market cap of $16.05B. On Wednesday the company traded 54,305,412 shares, 4.68 times its average trading volume. Share value changed by -3.33%.
8. LM Ericsson Telephone: Provides communications equipment, professional services, and multimedia solutions to mobile and fixed networks operators worldwide. Market cap of $31.03B. On Wednesday the company traded 19,971,808 shares, 4.48 times its average trading volume. Share value changed by -1.35%.
9. Louisiana-Pacific: Engages in manufacturing and distributing building products for new home construction, repair and remodeling, manufactured housing, and light industrial and commercial construction. Market cap of $1.10B. On Wednesday the company traded 10,584,253 shares, 4.33 times its average trading volume.
10. Sally Beauty Holdings: Engages in the distribution and retail of professional beauty supplies. Market cap of $4.03B. On Wednesday the company traded 4,773,557 shares, 4.1 times its average trading volume. Share value changed by 3.99%.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's by Rebecca Lipman does not own any of the shares mentioned above. Data sourced from Finviz.
At the time this article was published The Motley Fool owns shares of Annaly Capital Management and OpenTable. Motley Fool newsletter services have recommended buying shares of Western Union, Annaly Capital Management, and OpenTable. Motley Fool newsletter services have recommended creating a write covered straddle position in Western Union. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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