in which the volume of trading is large, whether the trend of prices is
upward, downward, or horizontal.
Another indicator of market activity for a specific security is
the spread between the bid and asked prices therefore; the closer such
prices are, the closer to meeting of the minds are buyers and sellers,
and so frequent transactions are more likely (trading volume).
activity may be measured by the absolute totals of shares traded. On this basis, reported stock volume of trading on the New
York Stock Exchange (NYSE), has been booming in recent years.
the other hand, market activity may be judged in relation to the total
number of shares listed. What
was considered to have been an active market decades ago, when total listings
were smaller, might not be so considered in recent years, in the aggregate.
Annual turnover of the total shares listed on the NYSE has risen
appreciably in recent years to 36%, but this compares with 50% in 1933;
and in 1929, turnover was 119%, compared with 132% in 1928.
markets become more active in an advancing phase rather than in a declining
trend, reflecting broadened public (as well as institutional) participation
of a speculative and investment nature, attracted by the advance.
Under circumstances of severe liquidation, however, this general
rule is excepted. For example,
in October 1929, a month of severe decline in stock prices, the record
for daily volume that stood for many years thereafter was established
on October 29, 1929 (16.4 million shares).
Also, on May 29, 1962, a day of severe decline in prices considered
the worst since 1929, volume totaled 14.7 million shares.
On the other hand, advancing prices have marked the most active
days of share volume in recent years, which have left the October 29,
1929, previous record well down the list.
On January 7, 1981, a record 93 million shares were traded.
increased institutional participation in the market is reflected in the
NYSE's studies of recent years.
The latest NYSE Public Transaction Study showed that institutions
and intermediaries accounted for a significant percentage of NYSE public
volume and most recently, computerized trading has greatly expanded trading
volumes, making 100 million share days routine occurrences.