Cumulative Volume Index (CVI)

Definition

The Cumulative Volume Index (CVI) is a running total of the difference between the volume of advancing stocks and the volume of declining stocks. Think of it as a running scoreboard that tracks whether capital is flowing into or out of the market on a cumulative basis.

Calculations

The Cumulative Volume Index is calculated as follows:

CVI = Previous Period CVI + (Advancing Volume – Declining Volume)

Definitions:

Volume of Advancing Stocks – The total traded volume of all stocks whose price increased during the period.

Volume of Declining Stocks – The total traded volume of all stocks whose price decreased during the period.

Takeaways

It’s best to use the Cumulative Volume Index together with other indicators and technical analysis tools. The CVI by itself is not designed to provide a standalone trading signal. Instead, it acts as a broad market gauge of capital flow and breadth.

A declining CVI may indicate weakening momentum and a potential trend reversal. A rising CVI may signal strengthening momentum and trend continuation.

What to look for

The CVI can help track market strength over time. It shows whether buying pressure (advancing volume) outweighs selling pressure (declining volume), or vice versa, across the entire market.

Summary

The Cumulative Volume Index tracks capital flow and overall market strength. When combined with other indicators, it can help identify when a trend is weakening or strengthening. The specific CVI value is less important than its overall direction and pattern.