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I was looking at the market (DOW) performance today and noticed an oddity: Beginning late in 2016 trading activity roughly tripled. The change was sudden and remarkably consistent. What would cause such a marked change in market behavior?Source http://money.cnn.com/data/markets/dow/

Source: http://money.cnn.com/data/markets/dow/

I'll note that Yahoo displays essentially the same phenomenon, so it's not just something wonky with CNN:

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Source: https://finance.yahoo.com/

While the NASDAQ doesn't show this effect, the S&P 500 does:

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Source: http://money.cnn.com/data/markets/sandp/

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  • $\begingroup$ That is interesting. It looks like manipulation, but at that scale, it is unlikely to be because of the transaction costs. This much volume if it were market neutral, would cause the bid-ask spread to substantially narrow. That alone would cause the market price to rise. Price is partially a function of liquidity. $\endgroup$ Feb 6 '18 at 5:20
  • $\begingroup$ The Dow is a small index, so it may not be the best measure to look at. Also, most traffic on the exchange is now algorithmic trading, most of which does not result in a transaction. Anything that causes some of that activity to show up as trading volume would cause volume to jump. The quant finance stack exchange is probably the best place to ask this. $\endgroup$ Feb 6 '18 at 11:52
  • $\begingroup$ @BrianRomanchuk - But it's hard to conceive of some sort of change in trading practices that would be both so sudden and so persistent. $\endgroup$
    – Hot Licks
    Feb 6 '18 at 18:58
  • $\begingroup$ @Hot Licks, The definition of what constitutes a “trade” may have changed (in particular, a new trading platform added to the data source), or else algorithmic trading style changed. I last looked at this years ago, and over 99% of trading activity was algos moving around bid/offers even then. There is no comparison of the current market microstructure to that of 20 years ago. $\endgroup$ Feb 6 '18 at 20:30
  • $\begingroup$ @BrianRomanchuk - I wasn't comparing to 20 years ago, only about a year and a half ago. $\endgroup$
    – Hot Licks
    Feb 11 '18 at 13:28

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