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Speculative Frenzy

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Pink is my new favorite color!

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Last month, I showed a chart of share volume in penny stocks. At the time, we saw that February volume was nearly twice as high as the previous record, set in January 2004.

The latest figures that cover trading through March show yet another expansion in the all-time record, this time a jump of 36% to 144 billion shares (yes, billion). As you can see in the chart below, 144 billion is a lot.
It wasn't just a large number of shares. The total dollar value traders committed to these positions was slightly eclipsed by January 2004, but other than that only the bubble days come close. The total number of transactions completed was close to the highest in history – only the early spring of 2000 was comparable.
Let me put this another way. In the spring of 2000, we were seeing traders put on trades of around 5,000 shares at a time for stocks that averaged about $1 per share. Last month, they were averaging 82,500 shares per trade at an average price of $0.05 per share. Which is more speculative?
This data is not being skewed by one or two stocks that happen to trade on the pink sheets. The top 10 volume leaders accounted for only 3% of the share volume and 0.2% of the dollar volume. The speculation was widespread.
If anyone sees Hoofy, ask if he's stocked up on his Rolaids for the summer.
No positions in stocks mentioned.

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