2020issue C046
Treat close-only volume as a hypothesis, then choose regime or phase
On-balance volume adds a period's volume on an up close, subtracts it on a down close, treats an unchanged close as neutral, and plots the running total as a line. A divergence from price is treated as a potential turn, yet the line ignores intra-period trading. Editorial reading: falsify that close-only claim inside the bar, then choose a put-call regime reading or a dual-timeframe moving-average phase check instead of stacking those tools as if they confirmed the same fact.
- On-balance volume adds a period's volume on an up close, subtracts it on a down close, treats an unchanged close as neutral, and plots the running total; a divergence from the related price series is treated as a potential turn signal.
- The construction ignores intra-period trading, so a heavy-volume up close can inflate the line when short-horizon participants finish flat, and the same signed-volume line can be computed on any time scale.
- Market advance-decline volume is treated as similar to on-balance volume and was abandoned after repeated false signals; a put-call ratio from put and call volume is proposed as a short-term contrary reading on daily and intraday charts.
- Editorial reading: do not stack a put-call regime reading with a daily and weekly 50-period and 200-period moving-average phase check as confirmation of the close-only line. Choose the tool that matches the question, the horizon, and acceptable risk.
How the signed-volume line is built
On-balance volume adds a period's volume when the close is up, subtracts that volume when the close is down, and treats an unchanged close as neutral. The running total is plotted as a line.
A divergence between that running total and the related price series is treated as a potential turn signal. The same signed-volume line can be computed on any time scale, not only a daily bar.
What the close leaves out
The construction ignores intra-period trading. A heavy-volume up close can therefore inflate the line when short-horizon participants finish flat.
That close-only accounting error is intra-period distortion: heavy trading inside the bar can raise or lower the volume line even when positioning is flat by the close.
Advance-decline volume is the same kind of claim
Market advance-decline volume, the market-wide comparison of up-volume and down-volume, is characterized as similar to on-balance volume.
In the historical workflow that comparison was abandoned after repeated false signals on stocks and indexes. It does not repair the close-only design.
A put-call reading answers a different question
A put-call ratio formed from put volume and call volume is proposed as a preferable short-term contrary reading to market advance-decline volume. It can be observed on daily and intraday charts.
Editorial reading: that put-call ratio is a market-regime question, not a second signed-volume proof of the same close.
Phase averages classify trend, not signed volume
Trend phase can be read from either daily or weekly 50-period and 200-period moving averages. The daily pair is used for more active horizons. The weekly pair is used to reduce shorter-term noise.
When both the daily and weekly charts and their respective moving averages change phase together, that coincidence is treated as a stronger indication that the instrument's trend has changed.
Whether the daily pair, the weekly pair, or both are used depends on how far ahead the trader is looking and how much risk is acceptable. Editorial reading: a phase label from those lookback averages does not confirm the close-only volume line.
All readings on this track · 31 readings
- 1989Constructing an open-interest-scaled put-call ratio
- 1990Open-interest put/call ratio as an intermediate sentiment overlay
- 1990Activity-weighted call-put ratio for options regime context
- 1990Stacking moving averages, put-call regimes, and double bottoms
- 1991Constructing put-call open-interest regime filters
- 1991Constructing an activity-weighted call-put sentiment reading
- 1991Fund-index regime, put-call confirmation, then the tracking fund
- 1992A seven-vote sentiment score for fund-sleeve regimes
- 1992Construct an activity-weighted call-put ratio before reading crowd conviction
- 1992Pair action with opinion in a composite sentiment index
- 1992Crowd extremes as a three-gate contrary procedure
- 1993Constructing a put-volume average regime filter
- 1993Neural-net inputs and rule trees for mechanical systems
- 1994Failed Treasury put-call signal and a dollar regime shift
- 1994Separate survey, put-call, and premium ledgers before a regime call
- 1994Repeated option-premium prints and a four-zone regime map
- 1995Consecutive-day regimes in the put-call premium ratio
- 1995Construct a put-call ratio for regime-aware contrarian signals
- 1996Treat one options idea as a regime-aware portfolio decision
- 1997Options open interest, put-call sentiment, and contrarian context
- 2000A two-layer put-call construction for intermediate market conditions
- 2002Sentiment confirmation for trend-following options
- 2003Construct a regime overlay from implied volatility and the put-call ratio
- 2004Dollar-weighted Put-call ratio construction
- 2006Debit put spreads inside put-call regimes
- 2011Put-call ratio cycle phases for index context
- 2011Constructing a put-call ratio cycle indicator
- 2011Building a put-call ratio indicator stack
- 2011Put-call ratio regime context with oscillator and band confirmation
- 2018Reading seasonal regimes with put-call divergence and bands
- 2020Treat close-only volume as a hypothesis, then choose regime or phase