Does volume matter?

We have been bombarded by differing opinions on volume lately. Certainly, falling market volume did not stop the 2010 portion of the rally just ended.  Some say volume is no longer essential. Others say ETFs and off-exchange trading renders common stock volume on the exchanges useless.

Well, volume matters. It always matters. Perhaps we cannot figure out how the rally took place in 2010 on falling volume and maybe, just maybe, a rally that does not have sufficient volume support ends up leading the market to crash and burn city. After all, the masses did not buy and that implies they did not see reason to buy - or better yet, to chase it.

Volume is the stuff that tells us if price is lying to us.Yes, I know price rules but price can be pushed around a bit.

Some wisdom:

• In price there is knowledge (Ralpha Acampora and Alan Shaw argue over who said it first)
• In volume there is truth (Dennis Jarrett)

Wednesday's stock market volume was not anemic, it was comatose. Give the Dow rallied 275 points, that is not very healthy. Buy the rumor that the president will rock our world in his jobs speech tonight?  If so, there was no support for it in the market. Yes, price went up but few people put their money where their mouth is.

This is a bear market and indeed rallies are exciting.  But the trend is down and volume tells us that the August - September gains were corrective, not impulsive, to borrow a little Elliott Wave terminology.