Today's column once again focuses on on-balance volume, also known as cumulative volume. This is basically a volume accumulator that adds the day's volume if the market closed up and subtracts it if the market closed down.
Joe Granville is credited with the study but it has been tweaked many ways in the decades since its been out. Weighted cumulative volume multiplies volume by price change and then adds/subtracts from the total. The version of money flow I used to use in the 80s takes that down to the tick level.
I loved money flow but I am sure it suffers from the same problems as all tick based indicators. Moot point since the Tradecenter database disappeared years ago.
Anyway, the point I made, this time for banks, was that volume is greater as these stocks are sold and that is bearish. Think of it as supply and demand where supply is kicking booty. (Do you think Blackbeard was thinking derriere that when he hunted for booty?)
The story was one more reason why volume matters again. This time, I applied it to the banks but overall I can see that it is indeed back in the game.