Concerns over the health of the stock market have been on the rise, and last week’s volatility certainly did not do the bulls any favors. As the threat of a significant global trade war accelerated through fresh action and tough rhetoric, investors saw fit to book profits and run for the exits.
Monday saw a completely different looking stock market, however. The market saw its strongest single day performance since 2015, with the Dow Jones Industrial Average rising by some 670 points. A monster day, to be sure, but will it be enough?
And while Tuesday is looking to see some follow through on Monday’s gains, there is a crucial element that has been missing: Volume.
From marketwatch.com, “ According to the WSJ Market Data Group, total composite trading volume in Monday’s session was about 7.17 billion shares, which made for the lowest-volume day since March 21 and which was below the year-to-date average daily volume of 7.39 billion shares. Analysts interpret volume as a proxy for investor participation, and lighter-than-average action on such a positive day in terms of price moves could signal that many remain skeptical that a corner has been turned.”
In other words, the lack of volume could be indicative of investors being unconvinced that the market will again head higher. And while stocks may see follow through on Tuesday, or even several consecutive days, an ongoing lack of volume could point to an eventual reversal.
Such market action may be seen near major market tops and bottoms. Periods of heightened volatility and large swings, as the bulls and bears fight for control. A topping process can take weeks, or even months, but once complete it can signal a major reversal in trend, and possibly a bear market.
Regardless of what your opinion may be when it comes to global trade and geopolitics, the war could be just getting under way. That could mean more volatility and more selling.
Given the strong potential for a market top, and the current geopolitical landscape, now may be the ideal time to consider significant allocations in alternative asset classes. Gold should be at the top of the list.
Gold not only has significant upside potential from current levels, but also may act as a hedge against rising inflation or even the next economic recession. Once investors begin the stampede out of stocks, assets like gold could potentially stand to benefit. If you would prefer to buy low and sell high, now is the time to act.
Speak with an Advantage Gold account executive today about the potential benefits of gold ownership. Our associates are here to answer any questions you may have, and can even show you how easy it is to add this key asset class using your IRA account.
Don’t wait for the next major stock market crash before taking action, and don’t be fooled by weak stock market rallies. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started today.Tags: advantage gold, gold, investor participation, stock market decline, volatility, volume