If you have doing any trading in the market recently, almost from a year or so ago, you would have seen the anemic volume being traded daily on most stocks. I am talking about stocks with 2B+ cap yet there is less than 5-10 million dollars worth of trading on the daily. In some cases the daily volume is less than 0.5% of the float.
I wondered if that is any indication to a stall or other event to come. I went back to locate any source that show the volume through at least the last crash. And surprisingly the 2008 crash was proceeded by a rise in volume for the 2 years before (2006 and 2007).
source: http://www.economagic.com/em-cgi/data.exe/sp/sp05
It seems that some have mastered the game. Buy bunch of stocks of a security, then keep trading a thin portion of them up and up and up, eventually you will double or triple your wealth. You would think that at one point the “players” would have to sell the security to make their money back. However, the new trend is options. So if you buy options on security real cheap and then raise the price or lower it to match that option, then you are making a killing without letting go of your stocks.
The extremely thin volumes allow anyone almost with 50 or 100 million dollar to control the price of multiple assets. I have seen stocks trading on 1000 or 2000 volume away from dropping 20 or 30%. I.e. if the stock trading at $40 then there are about 2000 shares in the queue between $40 and $30 or even $25. It is scary. It would not have been possible without the cheap money. Also, this tells a much scarier story, that the “presumed wealth” is nothing but high price tags on very shaky underlying securities. Between the huge cash to debt ratio, the negative cash flow, and the economic outlook there is nothing to justify these prices.