As spectacular as the rally has been, volume is simply not there!
Volume this summer has been the lowest compared to the first 4 months of the year since 1989. Below we provide a chart showing the ratio between average NYSE volume from May to August 5th and the average NYSE volume from January to the end of April. When the ratio is above one, the summer volume has actually been higher than the volume in the first 4 months of the year. A summer volume ratio above one occurred in 1990, 1995, 1997, 2002, 2003, 2006, and 2007.
The summer volume ratio this year is 0.83, which is the lowest level at least in the last 20 years. 2008 and 1994 had the second lowest ratios at 0.85. Of course, the first 4 months of this year were highly volatile, and the fact that things have cooled down is a major reason for the slowdown in volume.
Related post: The S&P; 500 Price-Volume Relationship at Mid Summer