New Caveats in Relying on Traditional Stock Market Statistics

Abstract

> In the past few years, long-standing patterns and practices in the securities business have altered profoundly. In some cases, the significance of these alterations for the interpretation of certain technical indicators has probably passed unnoticed. When the odd lot theory was formulated, for example, odd lot statistics traditionally showed a purchase balance. With the increase in split stock dividends, mergers and dividend reinvestment plans, huge amounts of odd lot shares have passed into the hands of investors without ever showing up in odd lot purchase statistics. As a result, only two of the last 17 years have shown purchase balances. The pattern of member transactions is changing, too. Over the last 40 years, purchases generally equaled sales. Now, with certain specialist firms handling odd lots, purchases no longer equal sales. When customers are consistently selling on balance