Just the Facts: Holiday Week Trap Door on Below Average Volume

Indices and Market Volume Overview

The Dow Jones Industrial Average closed 1.01% lower at 40,345, while the Nasdaq Composite posted a significant loss of 2.55%, closing at 16,691. The S&P 500 also followed suit, declining 1.73% to end at 5,408.

Trading volume remained below average for both the New York Stock Exchange (NYSE) and Nasdaq, with 932 million shares traded on the NYSE compared to an average of 970 million, and 5,583 million shares on the Nasdaq versus an average of 5,651 million.

The volume of declining stocks significantly outpaced advancing stocks on both exchanges. On the NYSE, the advancing/declining volume was 184 million to 741 million, while on the Nasdaq, it was 1,339 million to 4,214 million.

The number of decliners outnumbered advancers with a ratio of 656 to 2,126 on the NYSE and 1,010 to 3,247 on the Nasdaq. Notably, new 52-week highs outpaced new lows on the NYSE but lagged on the Nasdaq, where new highs stood at 113 compared to 230 new lows.

Relative Strength and Weakness

In a market where the majority of sectors experienced declines, certain assets managed to demonstrate relative strength.

The Short-Term Futures (VXX) saw the highest gain, rising by 7.44%, as investors sought hedges against volatility. The Thailand ETF (THD) and U.S. Natural Gas Fund (UNG) also posted gains of 2.08% and 1.02%, respectively, reflecting some degree of investor confidence in these sectors.

Other areas of strength included the Japanese Yen (FXY), which appreciated by 0.78%, and the U.S. Home Construction ETF (ITB), which edged up 0.45%. Notably, these gains were largely limited to defensive sectors and safe-haven currencies, highlighting a risk-off sentiment in the market.

Conversely, several sectors displayed pronounced relative weakness.

The Global X Lithium ETF (LIT) led the decliners with a loss of 4.88%, followed closely by the Rare Earth Metals ETF (REMX), which declined 4.47%. Semiconductors, represented by the SMH ETF, were also notably weak, shedding 4.13%, reflecting concerns over supply chain disruptions and weaker demand outlooks.

Uranium (URA) and South Korea (EWY) ETFs both fell by more than 3.7%, further illustrating broad-based selling across various sectors, particularly in more speculative or growth-oriented areas.

The trend extended to the Japan ETF (EWJ), which was down 3.58%, and other sectors including Social Media (SOCL), Clean Energy (PBW), Junior Gold Mines (GDXJ), and Silver Miners (SIL).