Over the past four trading sessions the trading volume has declined dramatically. Today the SPDR S&P 500 Trust(NYSE:SPY) is trading just 117 million shares as of 3:59 pm EST. Four trading session ago the SPY traded over 250 million shares. How could the volume decline so quickly with all of the geopolitical events that are taking place around the world?
Oil is surging higher as the Middle East and North Africa remain in turmoil. The European debt crisis continues to get worst every trading day. Inflation is roaring across all of the emerging markets. Yet the volume is declining to levels not seen since the summer doldrums. When traders see light volume it is prudent to be cautious when trying to sell stocks short. One of the talking heads in the media said that it seems like the markets are closed today. I have to agree with him. Just remember light volume usually favors the upside and selling stocks short is very tough. Hopefully, we shall see some more volatility and volume tomorrow.