Dead Market Exhibit A: January Volume

Posted by ZeroHedge with comment by Richard Russell

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Presented with little comment except to say that the total lack of volume (and massive concentration of what volume there is at the close) is hardly reflective of a market that is anything other than broken and dying. Last January (2011) the average number of stocks traded on the NYSE per day was 891mm shares vs 661mm for this January (a 26% drop YoY!) and this is down an incredible 59% from January 2008.

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January 31/2012: The final days of January saw the Dow down four out of the last five trading sessions. The sheer size of this still-forming top is scary. I think this top will be followed by a phenomenon known as the Kondratief bear cycle, a cycle that can endure for as long as 20 years. The other name for it is the nuclear winter, a rare and dangerous phenomenon that can last for a generation.

As we end the month it is notable that Lowry’s Selling Pressure Index (supply) is still substantially above their Buying Power Index (demand).
Joe Granville’s on-balace-volume statistics remain bearish, and Joe warns of years or bearish markets ahead.

In fact, Joe’s OBV figures are so negative that I called Joe on the phone today to ask him if his figures were for real. He told me that he expects the Dow to fall 4,000 points from here when this top breaks down. And no, Joe was not kidding.

Because the Dow was down on four days out of five sessions last week a corrective rally may be expected this week, but watch the volume. Whether volume increases on a rally tells us a lot about the strength or weakness of the market.

From the fundamental side, the yield on the Dow is down to a mini 2.52%, meaning that the Dow is way overpriced and way overvalued. Remember, the essence of Dow Theory is VALUES

Other article by Richard Russell:

Move Into Gold (Janary 11/2012

Sage Advice (December 13th/2011)

Red Alert (November 25th/2011) (via Michael Campbell)

About Richard Russell, author of the world’s longest-running investment letter, Dow Theory Letters went bullish on Gold below $300 in 2002,  has stayed bullish and remains L/T bullish to this day:
Richard Russell has made his subscribers fortunes. One of the best values anywhere in the financial world at only a $300 subscription to get his DAILY report for a year. Go HERE to subscribe.