Monday, September 14, 2009

Tracking Relative Volume Intraday: A Worthwhile Tell

If you click on the ES chart above and look at the 9:30 AM CT - 10:00 AM volume (blue arrows) for the past few days, you'll see that today's trade started with modestly below average volume but then--on a relative basis--expanded volume during that third 30-minute segment. Relative volume is a powerful gauge for showing us who is in the market at a particular time frame.

What that tells us is that more institutional traders participated during that half hour than is normally the case; that 9:30 volume of about 175,000 contracts was well above average. This is important, because it suggests that the bounce off the early lows has been gaining interest from large participants. As long as that is the case, we can expect follow through to the upside.