These four stocks represented thirty seven percent of all shares traded today.
Today 3,162 different stocks traded on the NYSE. These four represent 0.13% of the total, yet they comprised 37% of the volume. That’s an over-representation of nearly 300 times the average.
Now folks, let’s be straight here. Do you believe for one second that this is “great liquidity” added by the “high-frequency trading” computers that are almost certainly behind the vast majority of this volume?
This isn’t the first day with this sort of abnormal trading and volume pattern either. In fact it has been going on for the last week, with AIG making a frequent appearance on the list as well.
If there was ever an argument to be made for the NYSE having turned into a gigantic “hot potato” parlor game, this is it – in your face in an impossible-to-explain-away fashion.
– Stocks led by four wounded horsemen (of the coming apocalypse):
In fact, these four wounded horsemen of the financial sector comprised 40% of the overall trading volume on the NYSE on Tuesday. These stocks haven’t just been active, they’ve been surging.
This is kind of scary. It suggests that the late-summer portion of the almost six-month long market rally is being fueled more by speculation and momentum, not real optimism about a potential recovery in the financial sector and the overall economy.
If the economy were truly in “recovery” mode, and if consumer demand were truly picking up, the Baltic Dry Index should be moving consistently higher.
It’s not. And that fact should be a major warning sign for anyone buying stocks and betting the economy’s current blip higher is sustainable.
From 1936 into the late 1980s, the PE ratio tended to peak in the low 20s (red line) and trough somewhere around seven (green line). The price investors were willing to pay for a dollar of earnings increased during the dot-com boom (late 1990s) and the dot-com bust (early 2000s). As a result of the recent plunge in earnings and recent stock market rally, the PE ratio spiked and just peaked at 144 – a record high. Currently, with 97% of US corporations having reported for Q2 2009, the PE ratio now stands at a lofty 129.
Three-month slide could hit record lows, Royal Bank of Scotland chief credit strategist Bob Janjuah predicts.
He expects the S&P 500 index of US equities to reach the “mid 500s”.