I updated my 2003-2004 compared to 2009-2010 chart for SPY/S&P500 with another week of data and adjusted the normalized volume scale so that I wasn’t chopping off the curve. While the absolute value of SPY is almost identical to what it was 6 years ago the volume is about a factor of 6 higher, so the volume curves are only significant from a shape standpoint, not absolute values. The relative shape of the volume curve is very similar to the 2003/2004 behaviors.
If this correlation continues we will see an increase in volatility and volume and sideways price movement on the S&P 500.
I looked up some news from January 2004 and saw some interesting headlines:
Realtors Say Akron, Ohio-Area Home Sales Set Record.
Big difference here. High tech was in the tank but real estate was doing well. Money was flowing to “never lose money” real estate.
SEC Tightens Disclosure Rules for Mutual Fund Brokers in Wake of Scandals.
It was a bad time for the mutual funds industry.
Economic Pessimism Reigns in Walnut Creek, Calif., Area.
The California economy, at least the Bay Area, was in the tank–no change there.
Former Vice Chairman of Federal Reserve Predicts Continued Low Interest Rates.
The names change, but the problems remain the same…
Jan. 19 (2004)–WEST PALM BEACH, Fla. — As a former vice chairman of the Federal Reserve, Alan Blinder has a fair shot at predicting when Alan Greenspan will raise interest rates.
Blinder’s best guess: not until the moribund job market improves. He cited the “terrible” unemployment report of Jan. 9 as evidence that Greenspan will leave the federal funds rate alone for the foreseeable future.
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