Tuesday, October 31, 2006
Technical Indicators
Negative Volume Index
Read More...Norman Fosback first detailed the Negative Volume Index in his 1976 book, Stock Market Logic. Used in conjunction with the Positive Volume Index, it's an attempt to identify bull markets. These indicators are predicated on the assumption that smart money dominates trading on quiet days while less uninformed investors dominate trading on active days.
Fosback points out the odds of a bull market are 95 out of 100 when the NVI rises above its one-year moving average. The odds of a bull market are roughly 50/50 when the NVI is below its one-year average. Following this logic, the NVI is most useful as a bull market indicator.
Fosback points out the odds of a bull market are 95 out of 100 when the NVI rises above its one-year moving average. The odds of a bull market are roughly 50/50 when the NVI is below its one-year average. Following this logic, the NVI is most useful as a bull market indicator.
