CVI (Climactic Volume Indicator)
STVO (Short-Term Volume Oscillator)
VTO (Volume Trend Oscillator)

The OBV (On-Balance Volume) indicator set consists of three related indicators (listed above) that are derived from the basic OBV calculation. Before we discuss them, let's review OBV.

On-Balance Volume was invented by Joe Granville, and it is a basic analysis tool included in most charting software. (OBV is one of the indicators in Decision Point's Chart Tool. An OBV index is created by adding or subtracting the day's volume to a cumulative total based upon whether the stock closes up or down in the day. (Click here to read a more complete article on OBV.)

To construct the subject indicator set Decision Point calculates the OBV for each stock in a given index. Then we apply proprietary algorithms to those results that in turn are summarized into the actual indicators. We currently calculate these indicators for the SPX, OEX, NDX, and Dow. Because these indicators are related by the same basic OBV calculation, we present them together on the same chart, and they give us a view of OBV conditions in three different time frames.

CVI (Climactic Volume Indicator)

The CVI is used to measure overbought and oversold volume conditions in the very short-term. The exact calculation is proprietary, but it summarizes climactic activity of each stock in the index. What we mean by "climactic" is when the OBV index contacts the top or bottom of a short-term OBV envelope. The CVI is the net precentage of total activity, and the normal range is about +50 to -50.

Extremely high or low CVI readings signal short-term buying or selling climaxes that can coincide with actual price tops and bottoms. They may precede a period when the price trend declelrates or consolidates. The CVI should be interpreted only in a very short-term context.

STVO (Short-Term Volume Oscillator)

The STVO is simply a five-day moving average (5-DMA) of the CVI. As such it is still a short-term indicator, used like the CVI, but it reaches extreme readings much less frequently. Because of this it signals more important short-term tops and bottoms. The normal range is about +35 to -35.

VTO (Volume Trend Oscillator)

The VTO uses a proprietary algorithm to determine if the OBV trend for each stock in an index is up or down. The VTO is the net percentage of total activity for all the stocks in the index.The normal range of the VTO is about +50 to -50, and when the VTO reaches those extremes, it can signal that the market may be making a medium-term top or bottom.