Monday, December 07, 2009

What We Can Learn From Stock Market Volume

If you go back and check the relative volume norms that I recently posted, you'll see how sharply volume drops off from 10:30 AM CT through 2:00 PM CT. Notice also how the 30-minute median high/low ranges also drop off. We see about half the movement during midday hours as during early morning hours.

If we look, not at median high/low ranges, but at median open to close changes, those numbers become even more stark. The median open to close change during the first half hour of trade is only .29%. That dwindles to .11% during midday hours. The fact that open to close changes are only about half those of high/low ranges, tells you that, even during 30-minute market periods, there is considerable choppiness.

The figures can also be useful for telling you when there is enough movement and opportunity to trade--and when you might want to stand aside and wait for broader market participation and movement. A savvy reader will integrate the post on volume norms with the recent post on what moves markets and realize that the shifting volume numbers reflect *who* is dominating market action at different times of day.