Education / Indicators / UPSIDE-DOWNSIDE VOLUME

The Upside/Downside Volume indicator reflects the difference between advancing and declining volume on the New York Stock Exchange. The Upside-Downside Volume indicator shows the net flow of volume into or out of the market giving short-term buy/sell signals, based on zero line crossovers. Like all such oscillators, the greater the distance from the zero line, the greater the chances of reversal.

A reading of +40 indicates that up volume exceeded down volume by 40 million shares. Likewise a reading of -40 would indicate that down volume exceeded up volume by 40 million shares.
The indicator is useful to compare today's volume action with previous days. Currently, normal readings are in the area of ±50. Very active days exceed ±150 million shares (the October, 1987 crash reached -602).

The oscillator is very sensitive, upward movements are associated with buying, and downward with selling. Used in combination with the TRIN or other technical indicators, the Upside/Downside Volume indicator can be a very handy trading tool.

Calculation

The Upside-Downside Volume indicator is calculated by subtracting the daily volume of advancing stocks by the daily volume of declining stocks.