Positive Volume Index
Volume & money flow
The mirror image of the NVI: the PVI changes only on days with higher volume. So it tracks what 'the crowd' does.
In its original form this indicator uses volume and/or the daily range (High/Low). The scanner only has closing prices and approximates those inputs (see the note at the bottom). So treat the absolute values as indicative; the direction and the crossings remain usable.
Construction & calculation
- Start at 1000.
- If today's volume is higher than yesterday's, add the percentage price change to the PVI.
- If the volume is lower or equal, leave the PVI unchanged.
- Compare with the SMA(255).
If Volume(today) > Volume(yesterday):
PVI = PVI(yesterday) x (1 + percentage price change)
Otherwise: PVI = PVI(yesterday)
Interpretation
- PVI above its SMA(255): the crowd is buying along — confirmation of an existing trend.
- The combination is most interesting: NVI and PVI both above their average = a broad, well-supported bull market. Both below = broad weakness.
- Divergence between the two (smart money buying, crowd selling or vice versa) is a warning that the trend is not broadly supported.
How the signal works in this scanner
Buy signal (green)The PVI crosses above its SMA(255) within the last 15 bars and is still above it.
Sell signal (red)The PVI crosses below its SMA(255) and stays below it.
Watch-outs & pitfalls
- On its own weaker than the NVI. The real value lies in the combination of the two.