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NYSE / Nasdaq Volume


That doesn't look so good...

Toddo posted a quote in Buzz & Banter earlier from Lehman Brothers' Jeff DeGraaf. In it, he mentioned the ratio of Nasdaq volume to NYSE volume as a way to measure speculative interest in stocks (or lack thereof).

This is a popular measure that has been around for a long time, and for good reason - it tends to work pretty consistently when we see extremes. I've shown the ratio below, but I track it the other way around, as a ratio of NYSE volume to Nasdaq volume. So on this chart, when the orange line is above 1.0, it shows that NYSE volume has been greater than Nasdaq volume.

As Mr. DeGraaf noted, the ratio is now at it greatest extreme since 2003. We can see other times when investors greatly favored NYSE shares to Nasdaq shares, it coincided with high levels of uncertainty and future higher prices in the S&P 500 (July 2002, October 2002, January through March 2003, May 2004 and November 2004).

Conversely, low levels in the ratio, reflecting those times when investors were focusing on more-speculative Nasdaq issues, tended to coincide with periods where the S&P struggled going forward (January 2002, May 2002, March 2004 and January 2005).

This ratio is still rising, so there's no telling if it has reached its ultimate "extreme" or not for this move. But it's at a high enough level already that suggest traders have been concentrating heavily on "safe" equities (and I use that term very loosely) as opposed to more-speculative ones.
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