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Stocks: Look at volume data to determine where the indices are going.
- Volumes fell sharply last week
- But, the S&P has started to spring back already, suggesting that the US index could outpace its European counterparts
Volume data for global stock indices peaked in January, which preceded a strong rally. However, volumes dropped sharply last week, as investors remained on the sidelines and refused to extend their longs because the ongoing Middle East conflict confused the outlook for global growth. If we don't see volume pick up it will be extremely hard for stocks to gain enough traction to pull back to the multi-year highs reached in February.
FTSE 100 daily volume chart
DAX daily volume chart - like the FTSE 100 this also experienced a sharp drop in volume last week.
S&P 500 daily volume chart - this has started to move higher after reaching a low last week. This suggest the SPX could extend recent gains, before its European counterparts - the Dax or the FTSE 100 - manage to claw back some gains.
Worth keeping an eye on....
Kathleen Brooks| Research Director UK EMEA | FOREX.com
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