What if you threw a party and no one came?

Well that might hurt some feelings, but when we re talking about the market, this has significant consequences. The Chicago Board of Trade issued June volume today across the 4 major trading vehicles: Equity Index, Interest Rates, Commodities and Energy, for the month of June on a year on year basis. Volume has dropped an astounding 92.9% !!!

What this means to the market, too many things for me to consider at the moment, but when volume dries up, volatility increases. If we experience a downside move, this means those who are on the short side who actually provide liquidity in a falling market, will not be there. This will exacerbate the downside move as there is no short covering volume to offer a bid in the market. Low volume creates exceptional volatility. The fact y.o.y volume has dropped so dramatically sets up a very dangerous market environment, especially for those on the long side.

This should also be considered within the framework on what I've been saying for a month or so now, large players that are highly leveraged are seeking to rapidly reduce their leveraged exposure to the market with the uncertainty that comes with QE 2 ending. This report can be taken as a sign of the market's perception and how over leveraged many of these institutions are.


This is something to consider and ponder, but the actual figures are astounding, I cannot emphasize this enough with caps, bold or underline. Just think of the % drop, nearly 93% less volume since June 2010!