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Finance Dictionary and Glossary of Investment Terms
Negative Volume Index
NVI. An index that tries to determine what experienced investors are doing by looking at days where trading volume has decreased from the previous day, under the belief that unusually high volume is a sign that inexperienced investors are moving the markets. opposite of positive volume index.
The Negative Volume Index (NVI) focuses on days when the volume decreases from the previous day. The usefulness of this index is based on the premise that ""smart money"" quietly takes positions on days when volume decreases. When volume increases, the crowd-following, ""uninformed"" investors are in the market.In his book Stock Market Logic, Norman Fosback points out that 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. Therefore, the NVI is most useful as a bull market indicator.