Too bad we're not making $$$ trading based on volume. Price is what determines what we get paid or lose. That said, do you conclude that price arrived to at low volume is less 'valid' than price arrived to at high volume?
For the most part, I have found that the "low volume" comment is usually a newbie comment. From my 10+ years of trading, I have learned that volume of the overall market is one of the least reliable indicators. And by the way, it's freakin' August!
If I recall, we traded almost 5 billion shares on the NYSE about a week ago...and it was STILL AUGUST.
What do you mean by long term. What I consider long term would be 1 year out or longer. Then i wouldn't think this bull market will hold. The volume is lacking. Is it because of summer, or is it because many are spectators, i haven't a clue. But i will not be convinced that this will last past the Fall until we actually get through the Fall, and on higher volume. Right now, i see it as a temporary move to be taken advantage of before we revisit the lows. We seem to be moving toward recession. If bonds remain out of favor perhaps the stocks will be the beneficiary -- what an odd turn that would be!
I too have been trading 10+ years, and i'd have to disagree. But that's what makes life interesting. I find that when volume is low the bias (up or down) can shift far more readily, and is more easily shifted by relatively small orders, than when volume is substantial. Thus i find the last few days of up markets, though remarkable in the extent of the up move off the lows, to be an unreliable harbinger of what may come. I always keep one eye, well half an eye at least, on volume.
<i>"For the most part, I have found that the "low volume" comment is usually a newbie comment. From my 10+ years of trading, I have learned that volume of the overall market is one of the least reliable indicators. And by the way, it's freakin' August!"</i> Well, a lot of newbies back in August 2000 thought the low-volume lift off initial market breaks were an ascent back to new all-time highs. Remember then? Your 10+ years' experience encompasses that period. I don't have my charts up right now... what happened back in September 2000 when volume did return? PE bubbles then, credit bubbles now... tiny bubbles, in the late summer months of August.
I agree that the highs we reached on low volume (s&p 1560 or so) would fall under your argument. BUT what about this move on low volume against the lows at 1370. We are 110 S&P points off a HIGH volume move. How come the 1370 didn't stick? volume as an indicator = tea leaves. It tells a story past, but doesn't make a trade.