88-year old Joe Granville was on Bloomberg yesterday making some pretty bold statements. His philosophy on the market has been that Volume precedes Prices. He introduced his indicator OBV (On Balance Volume) in the 1960s and has been publishing the Granville Market Letter for the last 50 years.
I’m going to have to respectfully disagree with Granville’s hard philosophy about volume. I still think that price is the most important thing and volume is only secondary. Volume doesn’t pay us, price does. Would you rather make a million dollars on big volume or on light volume?
I think we also need to get used to lower volume, at least for now. Can we really compare today’s deleveraged daily volume to the wild and crazy days of 2008? Institutions aren’t getting the leverage they used get (thank goodness), so to compare uncomparable periods of time doesn’t make sense to me.
For more on OBV, Stockcharts.com does a good job with the explanation.