May 5, 2000

In your everyday life, you probably don't use as many "v" words as you do in an average market day. Here on Wall Street, we have "v" bottoms, volatility, volume (well, some days), and now we've got viruses to worry about.

You can tell it was a slow day on Wall Street yesterday when the biggest topic of conversation was a computer virus. Oh sure, the "I Love You" virus is important, but it seemed that was about the only thing anyone was discussing yesterday. For a few minutes, folks even forgot there was an

Employment Report

coming out on Friday morning; but I guess the virus was much more interesting than watching the market on Thursday. I likened watching the market on Thursday to watching paint dry.

But then I thought about it and realized that it's only been since late last year that volume on the

Nasdaq

and the

NYSE

has moved ahead to trade over a billion shares a day. Think about it: Last summer we thought the market was exciting and interesting, yet the average volume on Nasdaq was over 25% lower than it was yesterday. Maybe what we've seen for the last six months is the aberration, not the norm.

Volume has fluctuated so much recently that I no longer know what normal volume is. But I have made some observations about the individual stock volumes I'd like to share with you. A large majority of the technology stocks I post by hand (both on Nasdaq and on the NYSE) have seen volume shrink considerably of late. For example,

IBM's

(IBM) - Get Report

average volume for the past 30 days is 8.3 million shares; yesterday it traded only 3.6 million shares.

AOL

(AOL)

volume has shrunk so much I've had to change the volume scale on my hand-drawn chart. Volume yesterday was 9 million (for the past few days it's not been much more either); average volume for the past 30 days: 19 million. Even

Yahoo

(YHOO)

had been trading 16 million to 20 million shares a day just two weeks ago; this week, it hasn't traded more than 8 million on any one day.

This tells me there is a total lack of interest in these once-favored names. And since I believe volume is an important part of the equation, it is difficult to imagine these stocks breaking out of their trading ranges with any sustainability until volume picks up. Without a volume change, either up or down, these stocks will just muddle through, drifting down and drifting up. Without volume, there will be no follow-through on the upside or the downside.

Of course, this all leads to the employment number announcement on Friday morning. I believe the market at this point doesn't much care about the employment number.

What the market is really focused on right now is the May 16th

FOMC

meeting. Because we all know that, regardless of Friday's number, the

Fed

will raise rates the week after next; it's just a matter of how much.

And the oscillator won't help us too much during this time frame either. It's about to go wishy-washy on us. As we look forward at the numbers we are dropping on the 10-day moving average, we've got a few up days, a few down days, a few more ups, a few more downs, and so forth. That says choppy waters ahead for now.

One of the indicators I'm watching closely in here is the cumulative advance/decline line on the NYSE. It's been in a decline, or a bear market, since April 1998. Some might argue that it has had no relation to the rest of the market and has been a poor indicator since the

S&P

has gone to new highs and this has gone to new lows. I would argue that most stocks on the NYSE have been in a bear market for two years and this does truly reflect the individual stock performance. But this indicator has shown some different action lately than it has in the past two years: it's no longer making lower lows. This could very well be a way station before it heads lower yet again, but what if it's not? In the past week, we've had two days where the S&P was down and the cumulative a/d was positive.

In addition to this, cumulative volume on the NYSE has been acting a bit better as well. Should the downside continue to hold at higher lows into declines and the upside continue to stretch itself to new heights on rallies, this would be positive.

So volume is key in here and we've got to keep our eyes on it during what I suspect will be choppy days ahead.

Helene Meisler, based in Singapore, writes a technical analysis column on the U.S. equity markets on Tuesdays and Fridays, and updates her charts daily on TheStreet.com. Meisler trained at several Wall Street firms, including Goldman Sachs and Cowen, and has worked with the equity trading department at Cargill. At time of publication, she was long AOL, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. She appreciates your feedback at

KPMHSM@aol.com.