Wednesday, December 3, 2008

Never mind the length, look at the volume

If you are one of those nervous nellies you probably shouldn't be reading this blog because I haven't lost interest in the stockmarket as some have in the NZX.

In fact I am more interested than when the market was going up over the last 5 years-it is more exciting when there are bargains to be had!

Most of the big overseas investors have retrenched and sold while the NZ dollar was higher and most Mum and Dad investors seem to have sat on their shares and the NZX is now operating on a mere trickle of volume where wild swings and achy hearts are the order of the day.

We only have die-hards like myself making the odd trade and during some days in November there were as few as 2000 trades .

We all know that the New Zealand Stockmarket operates on small volumes by comparison to overseas markets, but the very low volumes traded over the last month or so are an indicator that those that are left in the market want to stay and conversely those that have left are not ready to take what they see as risk and get back into a market they presumably think has further to fall.

They are probably right.

Watch though when things in the economy start to improve and news media releases are of a more positive nature the volume of shares traded will begin trending up and that is when a sustained improvement in the market is likely.

Until then the current trickle of trades on the NZX is largely a lack of interest rather than any sort of market meltdown, as is the case with the current high volumes traded on the NYSE .

Keep a look out for any significant and sustained volume increases for a more meaningful indication of the mood of the market.

Positive, and indeed, negative.


Related Share Investor reading

NZX Hangover from 1999 possible



Related Amazon reading

Value in Time: Better Trading through Effective Volume (Wiley Trading)

Value in Time: Better Trading through Effective Volume (Wiley Trading) by Pascal Willain
Buy new: $44.10 / Used from: $37.49
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c Share Investor 2008