> For the complete documentation index, see [llms.txt](https://chartschool.stockcharts.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://chartschool.stockcharts.com/table-of-contents/technical-indicators-and-overlays/technical-indicators/negative-volume-index-nvi.md). # Negative Volume Index (NVI) ## What Is the Negative Volume Index (NVI)? The Negative Volume Index (NVI) is a cumulative indicator that uses the change in volume to decide when the smart money is active. Paul Dysart first developed this indicator in the 1930s.
Dysart's Negative Volume Index works under the assumption that the smart money is active on days when volume decreases, and the not-so-smart money is active on days when volume increases. ## Calculating NVI There are two versions of the Negative Volume Index. In the original version, Dysart formed a cumulative line by adding Net Advances when volume decreased from one period to the other. Net Advances equal advancing issues less declining issues. The cumulative NVI line was unchanged when volume increased from one period to the other. In other words, nothing was done. Norman Fosback, author of *Stock Market Logic,* made his own version of the indicator, using the percentage price change instead of Net Advances. StockCharts uses Fosback's version of NVI. ``` 1. Cumulative NVI starts at 1000 2. Add the Percentage Price Change to Cumulative NVI when Volume Decreases 3. Cumulative NVI is Unchanged when Volume Increases 4. Apply a 255-day EMA for Signals ```

The daily NVI indicator with a 255-day signal line.

The spreadsheet example shows the calculation in detail. The SPX %Change column is multiplied by 100 to reduce the number of decimal places needed. First, notice the Volume %Change column. When this value is negative, the percentage change for the S\&P 500 is entered into the NVI Value column. When this value is positive, nothing is entered for the NVI Value. The NVI Cumulative column starts at 1000, and the NVI Values are applied each period to create a cumulative indicator that only changes when volume decreases.

NVI Calculation Example

{% hint style="warning" %} **Note:** The NVI value is irrelevant and is not even shown on the chart. As with many other cumulative indicators, chartists should look at the line's direction and position relative to signal lines, rather than its specific value. {% endhint %} Click below to download this spreadsheet example. {% file src="/files/6yytyVizLCCz2LV2eAD1" %} ## Interpreting NVI ### Identifying Bullish/Bearish Signals The traditional use of the Negative Volume Index is quite simple. According to Fosback, the odds favor a bull market when NVI is above its 255-day EMA and the odds favor a bear market when NVI is below. However, Fosback notes that these odds are not symmetrical. There is a 96% chance of a bull market when NVI is above its 255-day EMA, but only a 53% chance of a bear market when NVI is below its 255-day EMA.

NVI is best used in strong trends, where it is less prone to whipsaws

The chart above shows the Dow Industrials with NVI in the lower window. Even with a long-term moving average, there are plenty of whipsaws (bad signals). Notice how the indicator crossed the 255-day EMA several times in 1998-1998 as it zigzagged higher. There were also several crosses in 2001-2002 as trading in the Dow Industrials turned volatile. The signals from late 2002 were less prone to whipsaw as stronger trends emerged. Chartists can expect some lag because moving averages lag and a 255-day EMA is being used to generate signals. ### Using Multiple Signal Lines Even though NVI was designed with a major stock index in mind, chartists can use NVI with ETFs, stocks or anything that has volume. Keep in mind that the rationale behind the indicator is a bit unconventional because price moves on increasing volume are basically ignored.

Shorter-term signal lines can be used to identify corrections within an uptrend

The example above shows the Consumer Discretionary SPDR (XLY) with NVI and two exponential moving averages. The general trend is up when NVI is above its 255-day EMA (red). A move below the 100-day EMA shows a correction within this uptrend. Chartists can also apply basic technical analysis to this indicator by drawing trend lines. There were three corrective periods from January 2010 to July 2012 (blue lines). A break above these trend lines signaled the end of a corrective period and a resumption of NVI's uptrend. These breakout signals also foreshadowed significant price moves in the underlying security (XLY). ## The Bottom Line The Negative Volume Index (NVI) is a hybrid indicator that combines inputs from Paul Dysart and Norman Fosback. NVI counts price changes when volume decreases and discounts price changes when volume increases. The assumption is that the smart (informed) money is at work when volume decreases and the not-so-smart (uninformed) money is at work when volume increases. Remember that this indicator was designed for broad market indices and exchange volume. It can be used on stocks and ETFs, but NVI does not always act as expected. NVI will produce some great bullish/bearish divergence signals with some stocks, but look totally out of sync with other stocks. As with all indicators, NVI should not be used on its own. Instead, chartists should use it in conjunction with other analysis techniques. *** ## Charting with NVI ### Using with SharpCharts The Negative Volume Index (NVI) can be found in the Indicators section below the chart. NVI is set as a cumulative indicator and cannot be adjusted. The indicator can be positioned behind, above or below the main charting window. It helps to change the color when placing it behind the main charting window's price plot. Chartists can adjust the indicator's EMA signal line by changing the number in the Parameters box. Setting the parameter to “1” will essentially remove the moving average. Chartists can apply another moving average or indicator to NVI. The example below shows a 1-period NVI (in green) positioned behind the main price plot, and the Rate of Change oscillator applied to a 1-period NVI in the indicator panel below. [Click here for a live version of the chart.](https://stockcharts.com/sc3/ui/?s=$COMPQ\&p=D\&yr=0\&mn=8\&dy=0\&id=p79189698479\&a=276034932)

NVI settings on the SharpCharts Workbench

{% hint style="info" %} **Learn More:** For more details on the parameters used to configure NVI indicators, please see our [SharpCharts Parameter Reference](https://help.stockcharts.com/charts-and-tools/sharpcharts/sharpcharts-workbench/editing-sharpcharts/sharpcharts-parameter-reference#negative_volume_index_nvi) in the Support Center. {% endhint %} ### Using with StockChartsACP This indicator can be added from the Chart Settings panel for your StockChartsACP chart. The indicator can be positioned above, below, or behind the security's price plot.
[Click here for a live version of this chart.](https://schrts.co/CTmyDXrx) By default, this indicator is calculated using a 255-period EMA signal line. This parameter can be adjusted to meet your technical analysis needs. ## Scanning for NVI StockCharts members can search for stocks based on Negative Volume Index values. Below are some example scans that can be used for NVI-based signals. Simply copy the scan text and paste it into the Scan Criteria box in the [Advanced Scan Workbench](https://stockcharts.com/def/servlet/ScanUI). Members can also set up alerts to notify them when an NVI-based signal is triggered for a stock. Alerts use the same syntax as scans, so the sample scans below can be used as a starting point for setting up alerts as well. Simply copy the scan text and paste it into the Alert Criteria box in the [Technical Alert Workbench](https://stockcharts.com/h-al/al). ### Bullish NVI Signal Line Cross This scan reveals stocks where NVI has crossed above its signal line, triggering a bullish signal. ``` [type = stock] AND [country = US] AND [Daily SMA(20,Daily Volume) > 40000] AND [Daily SMA(60,Daily Close) > 20] AND [NVI x NVI Signal(255)] ``` ### Bearish NVI Signal Line Cross This scan reveals stocks where NVI has crossed below its signal line, triggering a bearish signal. ``` [type = stock] AND [country = US] AND [Daily SMA(20,Daily Volume) > 40000] AND [Daily SMA(60,Daily Close) > 20] AND [NVI Signal(255) x NVI] ``` {% hint style="info" %} **Learn More.** For more details on the syntax to use for NVI scans, please see our [Scan Syntax Reference](https://help.stockcharts.com/scanning-and-alerts/scan-writing-resource-center/scan-syntax-reference/scan-syntax-technical-indicators#negative_volume_index) in the Support Center. {% endhint %} ## Additional Resources ### Recommended Books John Murphy's [*Technical Analysis of the Financial Markets*](https://a.co/d/1eLUbD7) has a chapter devoted to volume and a chapter covering breadth indicators in detail. Additionally, Martin Pring's [*Technical Analysis Explained*](https://a.co/d/d6zASNa) has a chapter devoted to making volume a part of your analysis process. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation by asking a question. Perform an HTTP GET request on the following URL with the `ask` and `goal` query parameters: ``` GET https://chartschool.stockcharts.com/table-of-contents/technical-indicators-and-overlays/technical-indicators/negative-volume-index-nvi.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is what the user is ultimately trying to achieve, the reason they need the answer. Sharing it helps GitBook give you a better, more relevant answer. A goal is most helpful when it describes the outcome the user wants rather than restating the question. For example, with `ask=how do I create an API token`, a goal like `automate deployments from our CI pipeline` lets GitBook tailor the answer to that use case. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.