As the last fleeting weeks of summer fly by, Wall Street typically enjoys a slower trading period, marked by the occasional headline.
However, seasonality and lower trading volume shouldn't be your excuse to get complacent. In this sneak peek from the Action Alerts PLUS investing club, renowned technical analyst and AAP team member Helene Meisler, explained what investors should watch as bearishness seeps into the final months of summer trading.
FULL VIDEO TRANSCRIPT BELOW:
J.D. DURKIN: Of course. So seasonality and the potential for major swings on low volume-- it's been a major point of focus for Chris Versace as we head into the final weeks of the summer. What stood out to you this past week, I wonder?
HELENE MEISLER: Well, first of all, I hate that excuse, seasonality. And I hate the excuse of low volume. Let me start with that NASDAQ volume has actually been higher this week than it's been in the last month and change. And we tend to rally on low volume and tend to sell off on higher volume. That is just a fact of market life.
And so let's just get rid of that notion that markets rally on higher volume and they go down on lower volume. That just doesn't happen. And, yes, low volume can tend to push stocks around more, but it's an excuse. The reality is we got overbought in the middle of July. Stocks had started to make lower highs. And we're in the midst of a decline.
J.D. DURKIN: Over on Real Money, you noted a bit of a shift in sentiment this week. Do you think there's worry that's beginning to bubble up to take hold on Wall Street? What do you think people should know?
HELENE MEISLER: Finally, we've gotten a little more than complacent. We've gotten almost too giddy by the end of July. And now I would say, we backed off too complacent, and now we're sort of-- the worry is starting to creep in. I can give you some statistics.
Just for example, you've had a lot of the survey data, where you've seen the bulls back off 10 or 15 points. But you've not yet seen the Bears really creep up. They're just sort of up one or two points. So a lot of the bulls have gone into that correction camp or the neutral camp. And generally speaking, I always find that people rarely go from bull to bear or bear to bull. They usually spend a little time on the fence in the middle of it all.
And I liken it to, you've got two neighbors. You've got a fence between them. One neighbor is having cocktails and having a great time. Caught in a downdraft. Called in the bears. The bulls are on the other side of the fence. They're looking at the bears having a great time.
They sort of mosey over to the fence. They're looking over. They're looking over. Eventually, they decide to jump the fence and join the bears in their party. The same thing happens the other way. So I think that's sort of where we are is that the bulls are sort of moseyed over to the fence.
