According to BofA, $SPY has traded <100M shares for 42 days, the longest streak since 2007 – indicating reduced liquidity into year-end.
I ran this chart – importantly, this low Volume only happened in 2005-07 and 2016-19. Most cases led to a pullback/shakeout in Stocks. pic.twitter.com/iqeIiwkdMN
— Macro Charts (@MacroCharts) December 12, 2019
- The US stock market rarely faces hurdles for those looking to freely buy and sell shares, but a Wednesday note from Bank of America details how the S&P 500 index could face a liquidity crisis in the near future.
- Nearly half of all US stock ownership is passive, and a widening gap between bid and ask prices is stifling potential trades.
- Money managers are also shifting funds into long-term vehicles and short-term bets, retreating from the medium-term strategies that drove consistent liquidity in markets.
- Even active investors are contributing to the problem, crowding into the index’s largest momentum companies at levels similar to “record Tech Bubble levels,” the analysts wrote.
just hope that growth is coming pic.twitter.com/ooW7Ln7ChC
— Alastair Williamson (@StockBoardAsset) December 12, 2019