NASDAQ / NYSE VOLUME RATIO
APPLICABLE TIME FRAME(S):
INTERMEDIATE
UPDATE SCHEDULE:
Each weekday night by 7:00 PM EST
EXPLANATION:
This indicator is based on the simple premise that when investors are uncertain, they tend to concentrate their trading on the "safe", blue-chip issues which trade on the NYSE, and they avoid the "risky", more speculative issues that trade on the Nasdaq.
Generally, high NYSE volume (relative to Nasdaq volume) is observed near lows as it shows a large amount of uncertainty. Low NYSE volume (again, relative to Nasdaq volume) is seen near highs, as market participants become comfortable with risk and so concentrate more heavily on issues traded on the Nasdaq exchange.
GUIDELINES:
Very low ratios suggest uncertainty. By "very low", we mean anything under 1.0 or so. When we see such heavy NYSE volume compared to Nasdaq volume, we can feel relatively confident in the notion that investors are excessively uncertain about future market direction and very often a market low will soon follow.
When the ratio is over 1.5 or so, then we are seeing very high Nasdaq volume relative to NYSE volume. This suggests that there may be too much speculation in the market, and a peak will often follow.
ADDITIONAL RESOURCES:
New York Stock Exchange (www.nyse.com)
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