Positive Volume Index (PVI)

The Positive Volume Index (PVI) provides buy signals for a given stock when the price is trending upward while the volume is trending downward.

Positive Volume Index (PVI)

The Positive Volume Index (PVI) provides buy signals for a given stock when the price is trending upward while the volume is trending downward.

The PVI and the Negative Volume Index (NVI) are together known as price accumulation volume indicators. They were first developed in the 1930s by Paul L. Dysart, who used market breadth indicators such as the advance-decline line to generate the PVI and NVI.

The indicators gained popularity following their inclusion in a 1976 book titled "Stock Market Logic" by Norman Fosback, who expanded their application to individual securities.

 


Positive Volume Index Calculation

The Positive Volume Index (PVI) is calculated based on price movements on days with increased volume.  A single input parameter is required which is the number of days used to compute the signal line (moving average of PVI).

Positive Volume Index Interpretation

The high volume days are consider to be driven by uninformed investors, and therefore Positive Volume Index is intended to track the price movements which the uninformed crowd is trading. The market is considered to be bearish if the Positive Volume Index crosses below its 255-period moving average.

Price chart with Positive Volume Index indicator illustrating a bear market

Following this premise, decreases in the Positive Volume Index are taken as indicative of smart money selling the stock. Sell (short) signals are recommended when the PVI crosses below its 255-period moving average.  Buy (long) signals are recommended when the PVI crosses above its 255-period moving average.  



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