The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (TheStreet) -- U.S. stocks, measured by the S&P 500 Index, posted a solid first quarter total return of 5.9%. It was the strongest first quarter since 1998. Those gains were delivered on light trading volume. Actually, to say trading volume was light is an understatement. March 2011 was the lightest month for trading since December 1999. The trend of declining trading volume that began at the start of 2010 has continued. While trading was quiet, the backdrop during the first quarter of 2011 was anything but dull. It included events commonly thought to provoke defensive action by investors, such as: oil rising above $100, violent conflicts in North Africa and the Middle East, earthquakes, tsunamis, and nuclear accidents. On the positive side, buyers were not inspired by the strongest private sector job creation since the recovery began along with rising earnings expectations. But, in a way, this good news may have depressed volumes. According to data from the Investment Company Institute, domestic stock funds experienced outflows in most of the months over the past four years. But, in general, investors seem to have halted their selling so far this year as the confidence in the economic outlook has improved. For the quarter, there were relatively few sellers or buyers. Headlines over the past year warning about the perils of low trading volume have become more prevalent lately. They make the case that a stock market that is rising on low trading volume reflects a fragile condition suggesting a lack of conviction by buyers that is likely to be easily and quickly reversed. However, there is no consistent evidence to show that this has been the case in the past. In fact, markets often advance on low volume, as the stock market has done for over a year now. We do not find the current low volume market environment worrisome. Those wishing for more volume should be careful what they wish for since a rebound in trading volume may come with the return of volatility rather than further steady gains. Along with trading volume, stock market volatility has been unusually low recently. For example, the 27% gain in the S&P 500 since August 2010 has been remarkably steady with an average daily price change of 0.53%, which is only one-third of the 10-year average daily price change. Add Comment Tweet 1 2 Last » Next › adsonar_placementId=1341527;adsonar_pid=879768;adsonar_ps=-1;adsonar_zw=600;adsonar_zh=280;adsonar_jv='ads.adsonar.com'; try { function DM_onSegsAvailable(segs, cust_id) { for (var i=0;i //* Global Functions *// function metadataRegisterNS(ns){ var nsParts = ns.split("."); var root = window; for(var i=0; i Dow Jones S&P 500 NASDAQ 10-Year Note 12423.27 1336.45 2798.71 34.89 Oil * 121.93 UP 23.24 UP 3.58 UP 9.52 UP 0.58 10 Yr 3.49% SPDR Gold 141.86 0.19% 0.27% 0.34% 1.69% Data delayed 20 minutes Top Stories and Tools var randnum = Math.floor(Math.random() * 100) if (randnum < 45) { document.write("Ex-Dividend Date Calendar"); document.write("Cramer's Latest Picks from Mad Money"); document.write("Free: Stock Rating Reports"); document.write("Top-Rated Stocks"); document.write("Highest-Yielding Dividend Stocks"); document.write("Investment Research Center"); } else { document.write("10 Best Dow Dividend Stocks"); document.write("Top 10 'Buy'-Rated Stocks Under $5"); document.write("10 Traits That Make You Filthy-Rich"); document.write("13 Ugliest Phones of the Mobile Era"); document.write("10 Celebrities Who Lost Big Financially"); document.write("Top Warren Buffett Dividend Stocks"); } Twitter Facebook RSS Mobile App adsonar_placementId=1341369;adsonar_pid=879768;adsonar_ps=-1;adsonar_zw=320;adsonar_zh=280;adsonar_jv='ads.adsonar.com'; Brokerage Partners YAHOO.util.Event.on(window,"load",function(){ setTimeout(function(){ TSCM.util.attachScript('scr_intellitxt','http://thestreet.us.intellitxt.com/intellitxt/front.asp?ipid=10685'); },1200); }); var onespot = { account: 'thestreet.onespot.com', modules: [ { name: 'top', placeholder: 'onespot_nextclick_top' }, { name: 'bottom', placeholder: 'onespot_nextclick_bottom' } ], content_areas: [ { select: 'h1' }, { select: 'div.virtualpage', exclude: 'div' } ], autolink_exclude: 'p:eq(0), p:eq(1), table', autolink_case_sensitive: true }; Free Newsletters from TheStreetAfter the Bell
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