Positive Volume Index - PVI

AAA

DEFINITION of 'Positive Volume Index - PVI'

An indicator used in technical analysis that is based on days where trading volume has significantly increased from the previous day. The Positive Volume Index (PVI) assumes that uninformed investors dominate the action on days with substantial trading volume, while the "smart money" - consisting of institutions, funds and professional traders - is more active on relatively quiet days with below-average trading volume.

As the PVI only takes into consideration days when trading volume is higher compared with the previous period, if the PVI is up, it implies that price is appreciating on rising volume, while a lower PVI implies that price is declining on rising volume. Technicians believe the PVI is better at identifying bear markets than bull markets. PVI can be calculated on a daily or weekly basis.

INVESTOPEDIA EXPLAINS 'Positive Volume Index - PVI'

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.

Fosback's research, which encompassed the period from 1941 to 1975, suggested that when the PVI is trending above its one-year average, the probability of the market being in a bullish phase is 79%. When the PVI is trending below its one-year average, the probability of a bear market is 67%.

Calculation of the PVI depends on how current volume compares with the previous day's trading volume. If current volume is greater than the previous day's volume, PVI = Previous PVI + {[(Today's Closing Price-Yesterday's Closing Price)/Yesterday's Closing Price)] x Previous PVI}. If current volume is lower than the previous day's volume, PVI is unchanged.

RELATED TERMS
  1. Negative Volume Index - NVI

    A technical indicator that relies on changes in a security’s ...
  2. Index

    A statistical measure of change in an economy or a securities ...
  3. Volume

    The number of shares or contracts traded in a security or an ...
  4. Volume Of Trade

    The total quantity of futures contracts bought and sold during ...
  5. Up Volume

    A stock volume that closes at a price higher than the previous ...
  6. Trade

    A basic economic concept that involves multiple parties participating ...
Related Articles
  1. Simple Moving Averages And Volume Rate-of-Change
    Technical Indicators

    Simple Moving Averages And Volume Rate-of-Change

  2. Identifying Market Trends
    Active Trading Fundamentals

    Identifying Market Trends

  3. Using Volume Rate Of Change To Confirm ...
    Active Trading Fundamentals

    Using Volume Rate Of Change To Confirm ...

  4. Introduction To Technical Analysis Price ...
    Trading Strategies

    Introduction To Technical Analysis Price ...

comments powered by Disqus
Hot Definitions
  1. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  2. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  3. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  4. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  5. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  6. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
Trading Center