The world of financial trading thrives on data-driven insights, and among the many indicators available, the Positive Volume Index (PVI) stands out as a reliable tool for analyzing market momentum. By focusing on price changes during periods of increased trading volume, the PVI helps traders identify when market enthusiasm is driving price movements.
PVI measures price changes only on days with rising volume, reflecting how investors react during high-activity sessions.
Developed by Paul Dysart and later refined by Norman Fosback, PVI serves as a complement to the Negative Volume Index (NVI).
When PVI drops below its one-year average, it often signals potential bear market conditions.
Used alongside NVI, it offers a broader perspective on both “uninformed” and “smart money” movements in the market.
PVI should not be used in isolation but rather in combination with other indicators and tools for confirmation.
Tickeron's Offerings
The fundamental premise of technical analysis lies in identifying recurring price patterns and trends, which can then be used to forecast the course of upcoming market trends. Our journey commenced with the development of AI-based Engines, such as the Pattern Search Engine, Real-Time Patterns, and the Trend Prediction Engine, which empower us to conduct a comprehensive analysis of market trends. We have delved into nearly all established methodologies, including price patterns, trend indicators, oscillators, and many more, by leveraging neural networks and deep historical backtests. As a consequence, we've been able to accumulate a suite of trading algorithms that collaboratively allow our AI Robots to effectively pinpoint pivotal moments of shifts in market trends.
The Positive Volume Index rises or falls in sync with price changes—but only when trading volume increases compared to the previous day. On days with lower or stagnant volume, the PVI remains unchanged. This selective tracking makes the PVI an excellent indicator for detecting when active traders are influencing the market.
When the PVI crosses above its one-year moving average (typically 255 days), it confirms bullish momentum. Conversely, a drop below this average often suggests a shift toward bearish sentiment. Many traders pair the PVI with moving averages, such as a 9-period or 255-period average, to filter out noise and better visualize market direction.
PVI’s core strength lies in its connection to trading volume, a factor long considered crucial by market theorists. Paul Dysart and Norman Fosback believed that volume reflects investor psychology—high volume often signals retail participation, while low volume tends to highlight institutional or “smart money” moves.
This idea gave rise to the Negative Volume Index (NVI), which tracks price changes when trading activity declines. Together, PVI and NVI offer a balanced view of market sentiment—one showing public enthusiasm, the other hinting at professional accumulation or distribution phases.
In practical application, the PVI serves as a confirmation tool. Traders use it to validate existing price trends or anticipate reversals. When the PVI moves above its long-term average, it often confirms a sustained rally, whereas a dip below it can foreshadow corrections.
However, traders should remember that no single indicator guarantees accuracy. Market whipsaws, news events, and macroeconomic factors can cause deviations, so it’s essential to combine PVI readings with broader technical and fundamental analysis.
In today’s algorithmic era, Tickeron’s AI-powered trading tools elevate traditional indicators like PVI by combining them with Financial Learning Models (FLMs) and advanced machine learning algorithms. These systems analyze real-time market data—volume, sentiment, and technical indicators—to generate precise buy/sell signals and trend forecasts.
Tickeron’s AI Robots and Virtual Agents can automatically track patterns across thousands of tickers, identifying where PVI-based momentum aligns with broader market signals. By leveraging this automation, traders eliminate emotional bias, increase consistency, and unlock strategies once reserved for institutional investors.
With tools like Tickeron’s AI Trend Prediction Engine and AI Pattern Search, traders gain actionable insights that complement classic indicators such as the PVI, leading to more data-driven, profitable decision-making.
The Positive Volume Index remains a cornerstone of technical analysis, offering valuable insight into how market volume affects price movements. When used with complementary indicators—and enhanced by AI-driven platforms like Tickeron—it becomes a powerful component of a disciplined trading strategy.
By understanding the mechanics behind PVI and integrating it with modern AI analytics, investors can transform raw data into clear, actionable market intelligence.
Summary
The Positive Volume Index (PVI) is a technical indicator that tracks increases in trade volume for an index or security, as well as the changes in price on those days. Paul Dysart developed the original version of this indicator for market indexes using advance-decline numbers instead of prices. The Positive Volume Index was then redesigned by Norman Fosback for individual securities – the version commonly used today.
Positive Volume Index increases or decreases with the price change in the security, but only on days when trading volume increases from the day before. A positive volume index which crosses below its 1-year average is purportedly a sign with 67% accuracy that bear market conditions are coming. Positive volume increases may indicate overbought conditions but are also confirmation of increasing prices.
If prices decrease past the one-year high of the index, it means that trading has been increasing despite decreases in prices on those days, and the conditions may be overbought, partially because increased demand should theoretically increase prices at some point.
Dysart considered volume to be the most important market indicator, and many traders today would agree. Fosback noted that the uninformed majority of investors were likely to be active on the days when the volume was highest, and both analysts felt that paying close attention the Negative Volume Index – which shows the days or weeks that saw decreases in trading volume, then compares changes in price on those days – would better indicate what the smart money was doing.
The PVI and NVI can be used together to give better context to the market, but while both indicators can be effective on their own and together, no indicator is 100% accurate. Whipsaws can obscure true trends, and other irregularities may arise. That’s why savvy traders will look for additional signals to confirm – or force them to reconsider – potential trading decisions. Tickeron’s Artificial Intelligence, known as A.I.dvisor, gives traders powerful ways to evaluate trade ideas, analyze signals, and provide the key confirmation needed to make rational, emotionless, and effective trades.