Price Follows Volume?

I came across this chart at Trader Mark's Fund My Mutual Fund.  It would seem back in June 2009 traders said party on, but we're out of here.  Other possible explanations of the chart and what it means from the article's comment section and elsewhere:



* Volume is down because share prices are up.

* Lack of trading by high frequency traders.

* Computer trading programs are idle because of low volatility.

* ETF trading volume might not be included.

*Investors are uncertain and therefore not trading.

* Investors are busy trading commodities and currencies.

* "Investment" volume is less than realized because of ETFs and high frequency trading

(see this Money Morning article).

Price follows volume.  This just might be the oldest adage in the trader's lexicon.  Investopedia explains traditional thinking on volume this way:

"...volume should increase when the price moves in the direction of the trend and decrease when the price moves in the opposite direction of the trend. For example, in an uptrend, volume should increase when the price rises and fall when the price falls. The reason for this is that the uptrend shows strength when volume increases because traders are more willing to buy an asset in the belief that the upward momentum will continue. Low volume during the corrective periods signals that most traders are not willing to close their positions because they believe the momentum of the primary trend will continue.

Conversely, if volume runs counter to the trend, it is a sign of weakness in the existing trend. For example, if the market is in an uptrend but volume is weak on the up move, it is a signal that buying is starting to dissipate. If buyers start to leave the market or turn into sellers, there is little chance that the market will continue its upward trend. The same is true for increased volume on down days, which is an indication that more and more participants are becoming sellers in the market."

Either this time is different or the old logic will win out (eventually).  We shall see.