Don’t fear the volume dip

March 21, 2011, 1:58 pm

Dont get phased when you read in a few weeks that volume is declining and this is a negative signals for equities.

So far in 2011, trading in Citigroup has averaged 11% of the total volume transacted in NYSE stocks, or 520 million shares. But following the banks recently announced reverse 1-for-10 stock split, volumes should fall 11%, according to Jeffrey Rubin at Birinyi Associates.

That equates to 469 million shares erased from the tape, dropping to an average of 52 million Citi shares daily.

Just be aware that it is because of a structural change and not a decline in volume, Mr.Rubin said in a note to clients.

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