Little can be said of the historical price movements that is not already obvious. More useful though is any technical analysis of what might be their cause.
The Negative Volume Index (NVI) can provide some information on the nature of the active market participants. It calculates accumulated price movements only on days when volume is lower than the previous day, and is meant to indicate the involvement of so-called ‘smart money’, usually interpreted as institutional investors. For those interested in further detail the brief quotes and the links appended are informative.
Looking at its application to CDY over the last couple of years there are a few directional changes in the NVI trend that can be interpreted. Its gradual fall to the low of mid-2017 (A) suggests little ‘smart-money’ involvement up to that point, which included the four major price spikes.
Some interest was displayed in the period (A-B) leading up to the share consolidation period. From (B-F) the NVI generally mirrored the price directions. The (C-D) rise corresponds with the result of the initial Eck involvement.
The general rise in the Index from the April low at (E) is significant, in that it represents a divergence from the price downward movement. In particular, the clear rise from late July (point G) onward against the steep price decline implies smart money has been buying on the up days. According to theory, the rise above the upwardly curving 250-day EMA also favours an approaching bull market. Time will tell.
In brief, these last features imply that the retail-to-insto transfer process began in July.
T7
From DayTrading.com The Negative Volume Index (NVI) trading indicator tracks cumulative changes in volume and is designed to understand when the “smart money” is active.
The central idea is that the “smart money” is most active on days when volume is light and markets are calm. On the other hand, the “not-so-smart money” is most active on days where volume is high and markets are choppier. The general idea is that the “not-so-smart” money tends to be more reactive to market events – especially in an emotional sense – than “smart money”.
From Investopedia Negative Volume Index trendlines can potentially be the best trendline for following mainstream, smart money movements typically characterized by institutional investors.
From StockCharts NVI counts price changes when volume decreases and discounts price changes when volume increases. The assumption is that the smart (informed) money is at work when volume decreases and the not-so-smart (uninformed) money is at work when volume increases.
The traditional use of the Negative Volume Index is quite simple. According to Fosback, the odds favor a bull market when NVI is above its 255-day EMA and the odds favor a bear market when NVI is below.
CDY Price at posting:
26.0¢ Sentiment: Buy Disclosure: Held
