I'm not a grouch by nature.  I'm a pretty easy-going guy (except when it comes to competition, to which my wife will attest).  For the most part, I would consider myself a "realistic optimist".

But there are a few subjects that get me riled up - politics (or politicians, more accurately), religious intolerance, anti-meritocracy...and volume.

OK, maybe volume doesn't quite fit with those others, but it's a sore spot with me.  I literally cannot count how many references I've seen over the past two days regarding Monday's "poor" volume showing, and how that means we really haven't bottomed.

Every one of those statements - every single one - was simply someone's opinion based on what it says in some decades-old technical analysis book.  None of them were supported by even a poor attempt at quantifying and testing their assertion.

We've done this several times over the years, but let's do it again.  Let's look at every major bear-market bottom since 1960 and look at total NYSE composite volume from the month before the low to three months after.  Then at least we'll have some basis in fact.  The red line in the volume plot is a 3-month average.

First, 1962:

Wow, look at that.  Volume was extremely heavy leading up to the low, then dried up as the market was rallying.  But wait a minute - according to almost everyone, this is impossible - the market cannot bottom on lower volume!  Puleeeeze.

Here's the next one, from 8 years later:

Once again, volume was very heavy heading into May and the eventual low.  It was above average in the two weeks following the low, but only two of those days showed volume spikes that were higher than what was seen during the decline immediately prior.  Soon after, volume dropped off precipitously, no doubt causing a furor among technicians pointing to "evidence" that buyers were no longer interested and we were doomed to hit lower lows.

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