Hot inflation. Surging interest rates. Historically low consumer sentiment. Record stock prices?
This story has played out for most of 2026, where typically concerning data has not reversed the momentum behind stocks. But what are the charts saying?
If you are trying to figure out which direction stocks may go over the short term, volume is one of the most important tools for chart users. While the S&P 500 has approached 8,000 for the first time ever, volume appears to have tailed off a bit in recent weeks and is slightly lower compared to the same time last year. This chart signal could mean more uncertainty over the last several months of 2026.
Volume is vital
Volume is simply the number of shares traded in a particular stock or other investment over a specific period of time. For example, as of October 15, 2026, the most actively traded US stock, based on 90-day average volume, was NVIDIA (
Analyzing trends in volume can help you validate patterns if you use charts and trends in your strategy. Technical analysts believe that volume precedes price; to confirm any trend, volume should increase in the direction of the trend.
For instance, if a stock were to increase from $23 to $25 on high volume relative to the recent trend in volume for that stock, technical analysts would consider this to be a more sustainable bullish trend (i.e., the stock could keep going up over the short term) than if the same price increase were to occur on relatively low volume. If a stock were to decrease from $25 to $23 on relatively high volume, technical analysts would consider this to be a more sustainable bearish trend (i.e., the stock could keep going down over the short term) than if the same price decrease were to occur on relatively low volume.
Price moves made on low volume may be said to "lack conviction" and could be viewed as being less predictive of future returns. You can tell when volume is high or low by comparing the current level to another time period (such as previous days, weeks, or months, depending on your time frame), an average, or some other benchmark. You should also consider seasonal differences in absolute volume amounts and volume trends.
What volume is saying now
Consider the chart below where the top half shows the daily price of the S&P 500 and the bottom half shows the corresponding daily volume.
The primary trends to notice in the chart above are the long-term uptrend, pockmarked by the March low, and the short-term sideways trend that has dominated since early August.
Volume has been marginally lower over the past several months compared to the prior months, and has also been a bit lower relative to the same period a year ago.
The sideways move in stocks, accompanied by the moderate decline in volume, suggests there may broadly be uncertainty as to the short-term direction of stocks. If stocks were to rally from this point on rising volume, that could be evidence that the long-term uptrend may persist through year end. If volume fails to confirm any subsequent moves higher or volume increases during a market decline, that could signal weakness.
Volume patterns and indicators
It's worth noting that, for a wide range of other chart patterns, volume is essential. For instance, 2 technical trading patterns that incorporate volume include the head and shoulders and flag and pennant patterns:
- In a head and shoulders pattern, volume usually decreases with each successive peak. If it does not, a trader might not expect the reversal pattern to complete. If volume does decrease with each peak and the pattern completes, the bearish breakout (i.e., a move lower) should then occur on increasing volume. The volume trends through the development of a traditional head and shoulders pattern differ from the reverse version, but a bullish breakout (i.e., a move higher) on a burst in volume after completion of the right shoulder in a reverse head and shoulders pattern would similarly confirm a trend reversal or breakout.
- In flag and pennant patterns (short-term patterns completed in 1 or 2 weeks that are initiated by sharp and nearly straight-line moves), volume usually decreases during the pattern. If it does not, the pattern may not continue as expected. If the pattern completes, the breakout should then occur on increasing volume.
There are also some technical indicators that use volume, rather than price, as the central input. The Arms Index, for example, measures relative volume in advancing stocks versus declining stocks. A value below 1 for this index suggests bullish sentiment and a value above 1 indicates bearish sentiment.
On Balance Volume (OBV) is another indicator that incorporates volume. OBV tries to detect momentum by providing a running total of volume, showing when volume is flowing into or out of a stock or other security. OBV is used to confirm price trends and spot divergences. An upward-sloping OBV would be used to confirm an uptrend, while a downward-sloping OBV might confirm a downtrend. Both OBV and the Arms Index are available in Fidelity Trader+™ Desktop.
Watch and listen
Will stocks continue to push toward new highs to close out the year? We are entering the most bullish 6 consecutive months of the calendar, and so history might suggest that could happen. Of course, there may also be volatility in line, given multiple notable risks.
But if you use charts to assess the market, it may be possible to tune out some of the noise and look to volume for evidence of what stocks might be up to next.