Negative 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.