Big Volume, but Little Direction

For nearly two months, the Nasdaq couldn't go anywhere while the S&P 500 outperformed. But now, the S&P can't get out of its own way, while the Nasdaq takes the lead.

So let's take another look at the Nasdaq. It still has not managed to break out of that 2400-2450 range. On Tuesday, Apple (AAPL - commentary - Cramer's Take) carried the day for the Nasdaq. I suppose if Apple had been down or even flat on the day, the Nasdaq might have been down or flat as well.

But that is rationalizing an indicator, something I don't like to do. Instead, I noticed something even more disconcerting in the short term: The Nasdaq's volume was a hefty 2.1 billion shares Tuesday. Impressive, eh?

Now look at the breakdown. If we subtract down volume from up volume, we get 244 million shares. Then we see that Apple traded about 115 million shares, thus counted as up volume. So if we omit Apple, we get 129 million as a net differential. Even if we don't subtract Apple's volume (after all, that is rationalizing an indicator!) 244 million as a net differential is really pathetic when you consider the massive number of shares traded.

Some of you might say that this squares perfectly with a market that was pretty much mixed all day, and I would agree. But doesn't it bother you that we used up so much volume to go nowhere? There was a tug-of-war going on, and the only winners were the brokers who made money on each trade!

Heck, the only thing that comes to my mind when I think of using all that volume to go nowhere is "Cash to burn finds a match."

Check out the number of stocks making new highs on the Nasdaq: There were fewer Tuesday than Monday. But take an even closer look: On Dec. 27, 153 stocks made new highs on the Nasdaq, while the Nasdaq itself closed that day at 2431.

Tuesday the Nasdaq closed at 2443. Maybe it's only another 12 points higher, but yesterday 67 stocks made new highs on the Nasdaq. All this volume, and new highs are shrinking!

Oh, and just for the record, new lows were up once again Tuesday as well.

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At the time of publication, Meisler had no positions in the stocks mentioned in this column, although holdings can change at any time.

Helene Meisler writes a daily technical analysis column and TheStreet.com Top Stocks. For more information, click here. Meisler trained at several Wall Street firms, including Goldman Sachs and SG Cowen, and has worked with the equity trading department at Cargill. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. She appreciates your feedback; click here to send her an email.