Cumulative Volume Index [CVI]

Return to Complete List of Functions

The Cumulative Volume Index function determines the momentum of the market by calculating the cumulative difference between the volumes of the advancing and declining issues. Parameters ------------------ Advancing Volume   For issues (securities) that closed above their opening price, the total volume traded. Declining Volume     For issues (securities) that closed below their opening price, the total volume traded. Note that while this function is intended for use with these specific values, any values can be used for these parameters, including preprocessed values or values for a subset of the market. Indicator Value ------------------------ The Cumulative Volume Index is calculated by subtracting the combined volume of all of the declining issues from the combined volume of all of the advancing issues and adding this to the previous value of the indicator. The value of this indicator at the beginning of the data series is considered to be zero. Since this is a cumulative indicator, the actual value is less relevant than the slope and direction of the line. Usage ----------- The Cumulative Volume Index (CVI)  is useful for determining whether money is flowing into or out of the market. When more volume is associated with advancing stocks (those increasing in price) than declining, the value increases. When more volume is associated with declining stocks, the value decreases. The CVI can be compared to current price trends to determine if there is support for those trends. For example, when prices are increasing, but the CVI is decreasing, a decreasing amount of volume is participating in the price increasing. Therefore, the price trend will typically begin to reverse. In general, broad market indicators can be used for trading against broad market indices through options, futures, and mutual funds. They can also be used to increase the effectiveness of more specific signals by adding confirmation or warning of upcoming trends. Source ------------ This indicator is based on an entry in "Technical Analysis From A To Z" by Steven B. Achelis.