On balance volume. It measures the strength of buying or selling...

On balance volume.

It measures the strength of buying or selling pressure on a security. It represents the cumulative total volume since indicator inception and adds volume on up days while subtracting volume on down days.

In both examples I gave (RRL and NCM) the maximum (or turning point) of the OBV indicator gave an early exit signal for the bull run in gold stocks that started around the year 2000 and ended with a colossal thud on the 12th and 15th of April 2013 when an important support level for gold (of US$1540) was smashed by a 2 hour long spree of gold short selling on the COMEX futures exchange in New York.

The same exit signal can be found by putting the HUI GOLD ratio chart up against the gold chart. The HUI GOLD ratio chart clearly shows that the party was over for gold stocks well before gold price chart did. The HUI index is in some ways related to the OBVs of the stocks it represents being a value index and so it is unsurprised that the HUI GOLD ratio and the OBV's of some of these stocks gave similar (forward looking) exit signals.

Although nordesmic does not think OBV's are important I think they are important when looking over longer cyclical time frames. If I get some time I might give some more evidence and explain this a bit better but for the moment we need to prove that we are truly at the beginning of a new cycle first. The jury is still out as measured by the HUI GOLD ratio that I follow. Need some more substantial uplift in this ratio for me to be convinced that a new era is underway.

Eshmun