When Will the Stock Market Avalanche Finally Happen?

NEW YORK (TheStreet) -- After being down for most of the day on Friday, the DJIA and the S&P 500 closed higher on the trading day. It must be put into proper context, however. There was no trading volume whatsoever on Friday. As a matter of fact, most of the volume was generated in the last 30 minutes of trading.

The DJIA closed higher by 5.71 points at 16851.84 and the S&P 500 was higher by 3.74 at 1960.96. The Nasdaq, led by the technology sector once again, was up 18.88 at 4397.93 while the Russell 2000, which saw a rebalancing at the end of the day, was up 8.79 at 1189.50.

There have been many reasons why the volume has been steadily decreasing over the last five to seven  years. I have no idea what is causing that phenomenon and nobody else does either, but there is a serious lack of liquidity in this stock market.

For example, on Friday, June 28, 2013, the S&P 500 Trust Series ETF (SPY) volume was 160.1 million shares traded. One year later, today, the SPY volume is 68.5 million shares.

Old Wall Street pundits will tell you that it does not matter anymore. It is different this time. If you believe that sentiment, good luck to you as we move forward.

This stock market is one geopolitical event away from a catastrophic collapse. The Federal Reserve balance sheet is at $4.4 trillion. That is over 25% of the Gross Domestic Product. Consensus macro remains way too high on its GDP estimates for 2014, even after having the first-quarter revision at -2.9%.

If you liked this article you might like

Market Is on the Straight and (Very) Narrow

Look Back to Go Forward

Stock Observations; Reviewing Equities: Doug Kass' Views

Even North Korea's Kim Jong Un Can't Stop This Epic S&P 500 Stock Rally

Robots Might Be Biggest Obstacle for Stock Market Bears