In just over a week it will be Memorial Day weekend. In recent years, this weekend has become the unofficial start of summer. Not long afterwards trading activity will likely begin to slowly decline (barring any external event triggers).
We refer to this summertime slowdown in trading as the doldrums due to the anemic volume and uninspired trading on Wall Street. The individual trader, if they are looking to sell a stock, is generally met with disinterest from The Street. It becomes difficult to sell a stock at a good price. That is also why many summer rallies tend to be short lived and are quickly followed by a pullback or correction.
Below we have plotted the one-year seasonal volume patterns since 1965 for the NYSE and 1978 for NASDAQ(NYSEARCA:QQQ) against the annual average daily volume moving average for 2017 so far. The typical summer lull is highlighted in yellow. A surge in volume this summer, especially accompanied by gains, would be an encouraging sign that the bull market will continue. However, should traders lose their conviction and participate in the annual summer exodus from The Street, a market pullback or correction could quickly unfold.