Volume At Price For The SPYders

Let’s stick a post in here before we put up the 2010 financial reform post. 

We've said since November that I believe it's possible to see the market take a rapid dump down to the lows made over the summer.  Market behavior is very unnerving on some levels.  Not because the market is going up but because how it is doing it.   The use of derivatives and leverage is offsetting the lack of fundamental demand for stocks.  This is exactly what we have written would happen probably a dozen times since the 2009 bottom.  ie, That counterparties would be forced out of the market due to fundamentals and financial firms would be left batting shares back and forth between themselves using the same quantitative algorithms.  ie, That all major financial firms would be on the same side of the trade.  We see that in Apple, Netflix, Amazon and the parabolic move in many commodities over the last few months.  This leads to many intraday dynamics which I have never seen.  I believe many financial markets are a lot less stable than it seems and all we need is an unexpected input to send the markets downward. 

To believe Wall Street has learned anything after being bailed out is preposterous.  They blew up with world with Frankenstein finance once and came close another half dozen times over the years.   While I didn’t support any ridiculous views espoused by radical nutjobs that we should have let Wall Street collapse back in 2008, the reality is that the bailouts have allowed systemic incompetence to gain an even greater hand in how Wall Street operates.   And the lack of prosecution for systemic corruption and fraud on Wall Street means the same goons are relying on the same failed strategies that have blow up the financial world before.  As we wrote at the time of the crisis, we should have either dismantled the mega banks or nationalized them and broken them up.  Instead we now have an even bigger freak show we call Wall Street. 

It’s been about five years or so since we explained volume at price and I’m not going to rehash it.  If you are interested, you may search the blog as there should be a handful of posts on the topic. 

Volume often acts as a magnet for pricing action.  ie, As the air gets thinner at price extremes, prices tend to return to substantial liquidity levels.  This is easily explainable as we noted before.  

Below is volume at the specific price levels for the SPYders ETF for all of 2010.  We see where those levels are.