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SPY’s Volume Speaks Volumes

I do not claim to be an avid student of market volume, and most market technicians would refrain from calling me an expert on the subject. However, I have enough knowledge on the matter to notice a few things once in a while. With this disclosure out of the way, I will now tell you what I have been observing. There are myriad volume measurements and statistics. There is the NYSE volume, NASDAQ volume, and let’s not forget BATS volume. For those of you not familiar with BATS, it is the third largest U.S. exchange. BATS captured a 22.0% market share of all U.S. equity trades in the month of August, so it is a name you should become familiar with. There are also statistics on up volume, down volume, and unchanged volume for each exchange. Many traders rely on volume indicators such as “on-balance volume” to guide their trading. Today, I want to focus on the volume of a single security – the SPDR S&P 500 Trust ETF (NYSEARCA: SPY ). It is the most heavily traded equity on the planet. It is just one of the more than 1,760 ETFs that are listed for trading in the U.S., yet it captured 35.2% of all ETF dollar volume in August. SPY trading averaged $35 billion per day last month, more than seven times the daily amount of the PowerShares QQQ Trust ETF (NASDAQ: QQQ ), the second most traded equity security. Meanwhile, Apple (NASDAQ: AAPL ), the most actively traded stock by dollar volume, averaged just $8.6 billion per day. Given the importance of SPY as a security, the importance of its volume is elevated, in my opinion. Earlier this week, many financial commentators were attempting to ascribe enormous bullish action to Tuesday’s +2.5% surge in the S&P 500 index, accompanied by an 11.6% bump in NYSE volume and a 12.1% rise in NASDAQ volume. However, I saw something different. The volume of SPY did not increase. It went the other direction and did so in an unambiguous way. The volume of SPY declined more than 43% versus the previous day. Additionally, that 2.5% rise in price came on the lowest volume in the past fourteen trading days. Not since August 18, before the market went into its recent tailspin, has SPY traded on lower volume than it did on Tuesday. Given the fact that most of the recent down days for SPY have occurred on increasing volume while up days have seen declining volume, I’m not ready to get bullish on SPY just yet. Additionally, since I believe SPY is one of the most important securities, I’m going to remain cautious on the overall market for the time being. Disclosure covering writer: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.

ETFs To Move On Mixed U.S. Job Data

Uncertainty seems to be the only thing that’s certain in the global investing backdrop. Several developed and emerging markets are dragging their feet currently, with the U.S. being the lone star planning a policy tightening. Since China messed up the global market with a bout of downbeat economic releases, all eyes were on the August U.S. job data as only this could throw light on the Fed’s rate hike decision. But like all other economic hints, the August job data also puzzled investors. The U.S. economy added 173,000 jobs in August which fell below the market expectation of 220,000 and the previous month’s tally of 245,000. If this was not enough, U.S. job numbers in August grew at the most sluggish pace in five months . While this raises questions about the domestic economy, a few investors might choose to look at the unemployment rate which dropped to 5.1% from 5.2%, the lowest since April 2008. A more-than-seven-year low unemployment rate should bolster the case for an imminent policy tightening. Additionally, average hourly wages rose 0.3% sequentially and 2.2% year over year. The average work week also nudged up to 34.6 from 34.5 in the prior and the year-earlier months. Rate Hike or Not? Now, this job picture gives fewer cues over the Fed’s imminent course of action. This coupled with the latest China issues makes the case more ambiguous. On the one hand, there’s an improving service sector, decent consumer confidence, a pretty strong housing market and a fall in unemployment rate hinting at the September lift-off. On the other hand, the missed job expectation in August is blurring the vision. Investors should not forget that there is always room for positive revisions in the monthly job numbers which might once again spark off a debate over Fed tightening. Whatever the case, several ETFs will be on the prowl to capitalize on this payroll-related news. ETFs to Move Among them, top U.S. equities ETFs SPDR S&P 500 ETF (NYSEARCA: SPY ), Dow Jones Industrial Average ETF (NYSEARCA: DIA ) and PowerShares QQQ Trust (NASDAQ: QQQ ) deserve special mention. On September 4, SPY, DIA and QQQ dived 1.5%, 1.7% and 1.2% respectively but started to gain their lost ground later on. Other ETFs that are highly vulnerable to Fed decisions are gold bullion ETFs including SPDR Gold Trust ETF (NYSEARCA: GLD ), emerging market ETFs like iShares MSCI Emerging Markets ETF (NYSEARCA: EEM ), Treasury bond ETFs like iShares 20+ Year Treasury Bond ETF (NYSEARCA: TLT ) and last but not the least the U.S. dollar ETF PowerShares DB US Dollar Bullish Fund (NYSEARCA: UUP ). While stocks and emerging market ETFs might underperform on policy tightening (as there will be a cease in cheap dollar inflows), UUP should gain. Gold ETFs will take a dive on a stronger greenback and treasury ETFs will start retreating on higher yields. Now it depends on how investors individually view the August job data and position their portfolio before the upcoming policy meet. Original Post

Asia Ex-Japan And U.S. Large-Cap Value: Two ETFs Trading With Outsized Volume

In the past trading session, U.S. stocks were in the mixed-to-positive territory with the China currency issue deciding the course of the market. For the top ETFs, investors saw SPDR S&P 500 Trust ETF (NYSEARCA: SPY ) gain about 0.1%, SPDR Dow Jones Industrial Average ETF (NYSEARCA: DIA ) add 0.06%, and PowerShares QQQ Trust ETF (NASDAQ: QQQ ) move higher by about 0.4% on the day. Two more specialized ETFs are worth noting in particular though, as both saw trading volume that was far outside of normal. In fact, both these funds experienced volume levels that were more than double their average for the most recent trading session. This could make these ETFs ones to watch in the days ahead to see if this trend of extra-interest continues: iShares MSCI All Country Asia ex-Japan Index ETF (NASDAQ: AAXJ ): Volume 3.14 times average. This all-country Asia ex-Japan ETF was in focus yesterday as roughly 4.13 million shares moved hands compared to an average of roughly 1.31 million. We also saw some stock price movement as shares of AAXJ lost over 1.7% yesterday. The movement can largely be blamed on the latest Chinese currency devaluation which sparked off a currency war fear among these Asian nations to maintain their export competitiveness as these can have a huge impact on Asian stocks like what we find in this ETF’s portfolio. For the month, AAXJ is down 7.9% and has a Zacks ETF Rank #3 (Hold). iShares Morningstar Large-Cap Value ETF (NYSEARCA: JKF ): Volume 3.13 times average. This U.S. large-cap value ETF was under the microscope yesterday as nearly 28,300 shares moved hands. This compares to an average trading day of 9,050 shares and came as JKF added about 0.2% on the session. The move was the result of a sudden lift in value quotient in the market, thanks to the rout in the global market due to the Chinese currency episode. JKF was down about 1.3% in the past month; though the fund currently has a Zacks ETF Rank #3. Original Post Share this article with a colleague