Trading Volume Hits Five-Year Low

By Trey Thoelcke Published Aug 22, 7:30AM EDT

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CNNMoney is the latest media outlet to acknowledge the fact that trading volume is light. In their estimation, it is at a five-year low. There could be several reasons for this. The most obvious is that it is summer and many buyers and sellers, both individual and institutional, are away.

The explanation probably goes deeper than that. The most convincing argument is that individual investors have watched the initial public offerings and insider selling debacles at Facebook Inc. (NASDAQ: FB). These same people have witnessed what were considered premier IPOs, like Groupon Inc. (NASDAQ: GRPN), unravel. According to CNN:

What’s more, the unusually low volume comes as stocks trade near four-year highs, raising concern that the recent move higher lacks conviction, and it’s just a matter of time before markets are mired in a sell-off.

It is always just a matter of time before a sell-off. But, as the harsh economic news that is likely to come out for the balance of the year is released, volume will have nothing to do with it.

Douglas A. McIntyre

About the Author Trey Thoelcke →

Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.

Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community. He previously oversaw the 24/7 Climate Insights site, managing editorial operations and content strategy, and currently oversees and creates content for My Investing News.

Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.

Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, overseeing a long-running critique group and moderating workshop sessions at regional conventions. He lives with his family in an old house in the Midwest.