The Dow's up but trades are scarce, worrying bulls
Apr 9, 5:18 PM (ET)
By BERNARD CONDON
NEW YORK (AP) - Think Dow 11,000 is a big deal? Think again.
The Dow Jones industrial average briefly hit the milestone Friday for the first time in 18 months before closing at 10,997.
But Wall Street analysts who study key stock index levels say all the attention paid to 11,000 is more like a big distraction. They worry that investors are ignoring another number at their peril: The surprisingly low volume of trading. As stocks have risen over the past year, the volume reflects the vulnerability of a rally riding on the shoulders of relatively few participants.
And that's given pause even to the bulls.
"It worries a lot of us," says Wellington Shields' Frank Gretz, a technical analyst who specializes in pinpointing market levels at which stocks might suddenly rise or fall. He wonders whether the volume signals that the rally could soon peter out, like the big surges that preceded steep declines in the 1930s in the U.S. and in Japan more recently.
Louise Yamada, a 29-year veteran of technical analysis who heads an eponymous firm in New York, says she's not just concerned but confused.
"Why is the market going up?" she asks. "You usually don't see advances without volume."
The widely cited Dow index, which tracks stocks of 30 companies, is up 70 percent from its lows of more than a year ago. The climb has been one of the strongest in history, and it may herald a strong recovery. But it's been propelled by relatively few trades.
My Way News - The Dow's up but trades are scarce, worrying bulls
Apr 9, 5:18 PM (ET)
By BERNARD CONDON
NEW YORK (AP) - Think Dow 11,000 is a big deal? Think again.
The Dow Jones industrial average briefly hit the milestone Friday for the first time in 18 months before closing at 10,997.
But Wall Street analysts who study key stock index levels say all the attention paid to 11,000 is more like a big distraction. They worry that investors are ignoring another number at their peril: The surprisingly low volume of trading. As stocks have risen over the past year, the volume reflects the vulnerability of a rally riding on the shoulders of relatively few participants.
And that's given pause even to the bulls.
"It worries a lot of us," says Wellington Shields' Frank Gretz, a technical analyst who specializes in pinpointing market levels at which stocks might suddenly rise or fall. He wonders whether the volume signals that the rally could soon peter out, like the big surges that preceded steep declines in the 1930s in the U.S. and in Japan more recently.
Louise Yamada, a 29-year veteran of technical analysis who heads an eponymous firm in New York, says she's not just concerned but confused.
"Why is the market going up?" she asks. "You usually don't see advances without volume."
The widely cited Dow index, which tracks stocks of 30 companies, is up 70 percent from its lows of more than a year ago. The climb has been one of the strongest in history, and it may herald a strong recovery. But it's been propelled by relatively few trades.
My Way News - The Dow's up but trades are scarce, worrying bulls
