Positive Volume Index (PVI)

Overview

The Positive Volume Index operates on Paul Dysart's pioneering insight that volume patterns reveal different market participants' activities. PVI only changes on days when volume exceeds the previous day's volume, accumulating price percentage changes on these high-volume days. The theory suggests that increased volume represents the "crowd" - retail investors and trend followers who typically enter markets during obvious moves. Starting from a base value (often 1000), PVI compounds these changes: if today's volume exceeds yesterday's and price rises 2%, PVI increases by 2%. On days with lower volume, PVI remains unchanged, allowing traders to isolate and track crowd behavior.

Dysart's research, later expanded by Norman Fosback in "Stock Market Logic" (1976), revealed powerful predictive capabilities when PVI is compared to its one-year moving average. Historical studies from 1941-1975 showed that when PVI falls below its 255-day average, there's a 67% probability of a bear market, while PVI above this average reduces bear market probability to just 21%. Initially, Dysart believed PVI would be more useful than NVI, but by 1967 he acknowledged that NVI (tracking smart money) proved more valuable. However, PVI remains essential for understanding complete market dynamics by revealing when public enthusiasm is driving prices.

Interpretation & Trading Signals

Example Usage

Code examples will be available once the Rust implementation is complete.