Online brokerage investors bailed Monday.

Fed up with doom-and-gloom stories about low trading volumes this quarter and just days away from the Memorial Day kickoff to the summer doldrums, investors in

E*Trade

(EGRP)

,

Ameritrade

(AMTD) - Get Report

and other online brokerage investors lined up to sell their shares. And given that no news has been good enough to lift these stocks in many, many months, it appears that investors may be taking the right path. It may take something dramatic, a major merger, for instance, to spur these stocks, analysts say.

More than 20 million E*Trade shares changed hands Monday -- nearly 13% of the float and far above the daily average of 7.4 million -- as the stock gave up almost 15% of its value. It closed down 2 7/8, or 14.8%, to 16 1/2. A majority of E*Trade's revenue comes from commissions generated by trading.

Ameritrade, meanwhile, lost 8.6%, finishing down 1 3/16 to 12 9/16. But it has a lighter institutional investor base than E*Trade, so it was somewhat sheltered, trading less than two-thirds of its usual volume with not quite 2 million shares changing hands.

Charles Schwab

(SCH)

, which depends much less on trading volumes, actually rose 1/16 to 41 15/16.

All of this came as the

Nasdaq Composite Index

was off only marginally after having had a rough time for much of the day.

"E*Trade's probably got a couple of big sellers in there," says Scott Appleby, an analyst for

Robertson Stephens

, a unit of

FleetBoston Financial

. "Institutions, retail, everyone's looking for reasons to sell." (Robbie Stephens has done underwriting for E*Trade.)

E*Trade declined to comment on its stock.

The big issue has been trading volume. Most recent conversations with investors in online brokerage stocks have revolved around this issue, says Matt Vetto, an analyst at

Salomon Smith Barney

. "The longer the market just sort of moves sideways, the more that issue weighs on people's minds," Vetto says. (

TSC

wrote about the volume issue in April.)

On Monday, investors were hit over the head with solid evidence that this is a reason to run. Analysts at two investment banks,

Credit Suisse First Boston

and

Chase H&Q

, warned of dismal May trading volumes in Nasdaq stocks, which account for many of the online brokerage transactions.

While online brokerage investors are accustomed to seeing trading

volumes decline in the summer months when customers are more interested in building their tans than their portfolios, this year trading volumes started falling in April, much earlier than usual. And the stocks most dependent on trading are the ones getting hurt the most.

For instance, James Marks, an analyst at Credit Suisse First Boston, writes in his note that average daily trading in Internet stocks is off 34% in May compared with April, and that Nasdaq trading volumes are down 25% from the first-quarter average. Nasdaq's weekly average volume, meanwhile, has sunk 40% from the week ending April 21. The bottom line? A decline of 10% to 20% in online brokerage transactions this quarter, he figures.

Meanwhile, Greg Smith at Chase H&Q wrote that so far this quarter Nasdaq volume is about 10% below the first quarter. If June is on par with May, second-quarter Nasdaq and NYSE volumes will be down 17% and 14%, respectively, from the first quarter, within Smith's projections of a 15% to 20% drop.

Now, it'll take more than just a good quarter of trading volume to get these stocks going again, analysts say. Appleby at Robbie Stephens says the sector needs consolidation, consecutive quarters of solid earnings or proof that it is making money by moving brokerage customers to other businesses such as banking.

After all, when the online brokerages announced better-than-expected March quarter results, the stocks barely moved. Ameritrade, for instance, earned 2 cents a share instead of the expected loss of 4 cents a share, and investors pushed the stock down 1 1/6. And as online trading volumes last December hit record levels, the stocks stagnated.

Even last week, when

Wit Capital

(WITC)

and E*Trade announced a deal to swap some assets, which smelled like consolidation, investors could barely muster the enthusiasm to buy online brokerage stocks on merger speculation. Wit's stock has since declined.