Indiana Grain Company, LLC

Posted: 09/15/09

By: tomgrisafi

What if they planned a stock market correction and nobody came?

That's the question CNBC is asking... along with everyone else.

Although investors were widely expected to return after the Labor Day holiday, volume has remained surprisingly light. The reason: so many people are worried about a big selloff that they're staying out of stocks, at least for now. And that's kept the market relatively flat so far this month.

"Everyone is just kind of looking at the long end in general, hoping for a correction of some magnitude and it's not coming," says Michael Cohn, chief investment strategist at Atlantis Asset Management in New York. "So everyone is really just sitting on their hands and not doing anything to a great extent."

Annual volume on the New York Stock Exchange is running about 20 percent below the same period for 2008, according to data from Thomson Reuters. Average daily volume for September 2009 has been 1.44 billion, compared to 1.49 billion in 2008 and 1.57 billion in 2007.

Still, with September the worst month historically for stock market performance (and with the market either at or rapidly approaching overbought status) there's not as much reason this year for investors to flock back.

"Clients are calling me up and saying they want to get back in the market," Cohn says. "When I tell them I want to take it slow and see what happens, every single person says, 'I really love that idea because I hear that the market goes down this month.'"

So when will investors come back? Market pros think volume could pick up soon and add some volatility to a relatively moribund market. There already are signs that the slowdown in volume is changing.

Source: Reuters, CNBC

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