Cumulative Volume Index (CVI)
The CVI takes into consideration the market momentum for demonstrating money flows in and out of the market by subtracting the volume of descending stocks from the volume of growing stocks and adding the result value to an ongoing total figure. An effective method of interpreting the Cumulative Volume Index is to watch the general trends. The CVI demonstrates if there has been more down-volume or up-volume and how long the ongoing volume trend has been remaining on market.
The Cumulative Volume Index resembles On Balance Volume, or OBV, in some respects. Both indexes were developed to demonstrate if the volume was flowing into or out of the market. The differ is in the following aspect: the OBV says that all volume is up-volume when the stock closes higher and that all volume is down-volume when the stock closes lower as up-volume and down-volume can't be used with individual stocks while the Cumulative Volume Index uses the actual up- and down-volume for the New York Stock Exchange.
It is also possible to search for increasing discrepancies between the CVI and a market index. When the market index demonstrates a new peak while the CVI does not react at all, it means that the market is going to correct itself to confirm the story based on the CVI results.
It is important to know that as the CVI as a rule starts at the zero point; the CVI numeric value is not so significant. The slope and pattern of the CVI are significant.