Market Volume Screams Oversold

Bespoke Investment Group says the market is screaming oversold, based on multiple indicators they track. In particular, 10-day average trading volume for NYSE listed stocks as a percentage of total market volume has hit 35%. This is higher than any reading since November 2009 and is two standard deviations away from a standard reading.

According to Bespoke, this is significant:

Bespoke: In the charts below, we show the S&P 500 and the 10-day average upside volume on the NYSE. On the chart of the S&P 500, we have also included red dots to show each time upside volume was at least two standard deviations below average. As shown, most (although not all) of these readings have occurred near short-term lows. In fact, in the week following these instances, the S&P 500 has averaged a gain of 0.89%. Over the next month, the S&P 500 has averaged an even greater gain of 4.3%.

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