Wednesday, December 27, 2006

Declining Volume -- Correction or Seasonal?

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The SPY's volume has been declining since December 11. We've seen lower highs and lower lows.

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The QQQQ's volume has declined since December 18. Also note the QQQQs are bumping into the 20-day simple moving average.

The end of December is essentially a Wall Street holiday, so declining volume could simply be a sign of early vacations and nothing more. But declining volume can also be a sign a waning buying interest.

Food for thought.