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Navigating This Low-Volume Market

Traders should pick individual stocks to short, rather than taking a general bullish stance on this market.


Video Transcript

We’re back on the S&P 500. I think the bottom line right now is we’ve got fairly low levels of volume and volatility. In general, that’s actually a pretty bullish sign. I know you’ll read headlines all of the time that low volume is a bad thing. It’s not, not even by a stretch.

In fact, it is the common thing in a bull market, and it’s becoming more and more common these days as high frequency traders aren’t as productive as they used to be, so they’re not trading as much as they used to. That’s a trend that started last year, and I expect it will probably continue.

It’s a phenomenon we’ve seen before. We’ve seen it in the futures market. We’ve seen it in the stock market a couple of times. High-frequency trading and automated trading ebbs and flows, and right now it’s in an ebb. Although it will affect total volume numbers, that’s not representative of what’s actually going on the market where we see net inflows going on right now.

So, there does seem to be continuing bullish activity that should underwrite this rally. That said, I’m still expecting dips along the way – like we saw Monday and along the lines of what we saw in December and February.  So, anything that we’re trading that’s fairly bearish, we want to be picking on those names that are pretty ugly and if they do break, it would be a big move to the downside to offset the risk to the upside. So, we’re not recommending just shorting the general market indices, or something like that – stick with individual stock names.

Investor Place advisors John Jagerson and S. Wade Hansen are co-founders of, as well as the co-editors of SlingShot Trader, a trading service designed to help you make options profits by trading the news.  Get in on the next trade and get 1 free month today by clicking here.

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