EDITOR NOTE: Volume is an important indicator when evaluating market rallies and selloffs. By paying close attention to volume, you’re better able to tell whether market movements are a product of market illiquidity or whether they truly represent a battle between bears and bulls en masse. The market sell offs over the last week were high-volume events in which “selling pressure” far significantly outweighed “buying pressure.” This keeps traders on edge, meaning their fingers are ready to press the sell button. It doesn’t help that the markets have also been near critical support levels. With today’s selloff, those support levels might have broken down, meaning more downside to come in the following weeks. Brace for it.
The ferocity of the U.S. stock rout on Wednesday sent a measure of selling pressure to near the most extreme on record -- an occurrence that’s become increasingly frequent in the past two months.
The number of shares falling on the New York Stock Exchange exceeded those rising by 1,957 at the height of the selloff, sending the NYSE TICK Index to the second-lowest level since June. The gauge registered its most extreme reading ever that month, and has come close six times since then.
The resurgent pandemic, lack of new U.S. stimulus and looming presidential election are all contributing to investor nervousness. Combined with this year’s equity rebound and elevated volatility, it is leaving traders ready to hit the “sell” button.
Wednesday was the worst day for the U.S benchmark equity gauge since the TICK Index hit the record in June. The S&P 500 slumped 3.5% as all but 15 companies finished in the red.
On Thursday, the gauge rose 0.6% at 10:19 a.m. in New York, still well down for the week.
Originally posted on Yahoo! Finance