Negative volume index
Tracks cumulative price changes only on days when volume falls versus the prior day, based on the idea that informed “smart money” trading tends to happen on quieter, lower-volume days.
What the numbers mean
There is no lookback for the index itself — it only updates on bars where volume fell from the previous bar. The conventional companion is a 255-period EMA, roughly one trading year, used as the signal line.
- 255 — the EMA signal line, roughly one trading year
- Updates only on bars where volume fell from the previous bar
- Cumulative, so the starting point sets the absolute level
How it is used
The classic reading is a long-horizon regime gauge. Norman Fosback's original research put the odds of a bull market at roughly 96% when NVI sits above its 255-day average, but the odds of a bear market at only 53% when it sits below — so it works far better as bullish confirmation than as a warning.
- NVI above its 255-period average → historically associated with bull markets
- Crossings of that average → a slow regime signal
- Not a trading tool; a multi-month backdrop reading
How it relates to everything else
NVI pairs with the Positive Volume Index, which does the opposite — updating only on rising-volume days. The premise is that informed money trades quietly while crowds trade loudly, which is folklore with some historical support rather than an established fact.
- Counterpart to the Positive Volume Index
- Operates on a scale of months and years, not days
- The premise behind it is convention, not proven mechanism
What to watch for
It is a slow, macro-scale indicator with little to say about the next few weeks, and the 'smart money trades quietly' premise behind it is convention rather than established mechanism.