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Strategies & Market Trends : MDA - Market Direction Analysis

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Nov 14 4:00 PM EST

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To: Les H who wrote (68982)	2/12/2001 12:34:31 AM
From: John Madarasz	Read Replies (2) of 99985

Many of you may have noticed a drop in Nasdaq volume last week. For those that did not catch the press release, the Nasdaq changed volume reporting requirements effective Friday, 2-Feb. The Nasdaq used to report every trade as a buy transaction and sell transaction. If 100 shares traded, then 200 shares were reported as volume: 100 bought and 100 sold. Now, if an order comes through to buy 100 shares at 23 and sell 100 shares at 23 (a buy and sell at the same price or a riskless transaction), this transaction would only report 100 shares volume. The NYSE continues to report 100 shares bought and 100 shares sold as simply 100 shares volume. Just to get a rough idea of the difference this change could make, I did some calculations on the back of a napkin. Sometimes the easiest methods are the best. Since the new reporting requirements, the Nasdaq averaged about 1.8 billion shares. Just prior to implementation, the 60-day SMA stood at 2.11 billion shares. Therefore, I would estimate that last week’s volume was about 15% below the prior average and 1.8 billion should mark the new threshold to determine above and below average volume. stockcharts.com

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