The headline said that the market was up 1% today. But...what does that really mean? Was every stock up 1%? No. What if only tech stocks, which comprise 20% of the market caps of the S&P 500 (the market, in this sense), were up 5%? Well, that would imply that the rest of the market was net flat.
The breadth figures matter a lot, because they reflect overall sentiment in the market as a whole, not just one stock or one group or one entity. If the market is broadly...up, then maybe global interest rates went down...or peace broke out everywhere...or nervous investors just decided to collectively jump in, turning their safe cash into relatively risky equity investment.
And the notion of a market being liquid means that there's a lot of volume in it...usually a good sign for investors. Lots of volume usually implies lots of "new" money coming into the system, with sentiment getting better from those cash hoarders who have previously been sitting on the sidelines doing a whole lot of...nothing.
See: Thin Market. See: Liquid Market.
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Finance: What is Trading Volume?29 Views
finance a la shmoop what is training volume training volume with a lot of
volume and this is trading with okay yeah yeah you get the idea [Man shouting into megaphone]
volume here is not about number 11 on the dial but rather about the number of [Person turning up volume dial]
shares trading back and forth on a given day week hour a month and generally
speaking higher levels of volume are a relatively bullish sign for the market [Water pouring]
on all else being equal that is optimistic investors are putting money
into the system buying up stocks and contributing liquidity like they are [Investor money transfer to stock market]
seeking risk they're hopeful they're optimistic lots of volume high liquidity
low volume low liquidity and high is good
Inessa not just a california proposition 64 thing high volumes are attractive to [People protesting for cannabis]
large institutional professional traders and investors because there remains the
perception that if they want to sell a given position well then with high
volumes they can get out quickly so they feel less hesitation about getting in
quickly okay good just checking [Man shouting into megaphone]
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What is a thin market, and has it been on Jenny Craig recently?