Positive Volume Index   

The Positive Volume Index was introduced  by Norman Fosback and is often used in conjunction with Negative Volume Index to identify bull and bear markets. Positive Volume Index (PVI) is calculated based on price movements on periods with increased volume. The high volume periods are consider to be driven by uninformed traders, and therefore PVI is intended to track the price movements which the ‘uninformed’ crowd is trading. The market is considered to be bearish if the Positive Volume Index crosses below its 255-period moving average. A single input parameter is required which is the number of periods used to compute the signal line (moving average of PVI).
PVI assumes that on periods when volume increases, the crowd-following “uninformed” traders are in the market. Conversely, on periods with decreased volume, the “smart money” is quietly taking positions. The Positive Volume Index is typically compared to a 255-period moving average of its value. When the index increases above this value, less informed traders (the crowd) have typically been buying , indicating the prices may continue to increase. When the index increases below this value, uninformed traders have typically been selling, indicating a possible decrease