|  AUG 1989

Most active STOCKS by Arthur Merrill

Most active STOCKS by Arthur Merrill The 15 most active issues on the New York Stock Exchange (NYSE) are listed daily in The New York Times and The Wall Street Journal, and weekly in Barron's. Are these statistics helpful? The average price statistic can be used to measure the speculative tone of the market. A market dominated by low-priced stocks is speculative; one dominated by high-priced stocks is usually respectable. Because the market becomes speculative at the top of a swing, low values of this indicator should be found at market peaks. I use the weekly statistic reported in Barron's and correct it for price level by dividing by the NYSE composite average. I then smooth the data by a 33% exponential moving average (approximately equivalent to a 5-week simple moving average). How well has it performed? Figure 1 presents the past five years. Price gradually deterioration in 1985 and early 1986, then maintained a steady, low level through 1986 before further deterioration. The lowest points were April and August 1987, giving warning of speculation before the October 1987 crash. There are signs of speculation in 1988 and 1989, which are not encouraging.

by Arthur A. Merrill, C.M.T.