Price/Volume Diffusion Index Remains Above 50 But......

To provide you an update on the latest Price/Volume Diffusion Index (PVDI) results, the most recent index came in at a level above the 54 demarcation. This level remains above the 50 demarcation, suggesting that the equity markets will remain in an uptrend. The chart below updates the PVDI for the most recent trading days.

PVDI

Although the PVDI remains above the 50 demarcation, I would suspect that this optimistic reading may be either short lived or at the very least we will see the PVDI turn down. The PVDI, just by the nature of the math involved in its calculation will lag market prices or the immediate turns in the S&P 500.

For that, you should look at the summation index, which feeds into the PVDI, and the slope of the summation index. I show both below.

Summation Index

Slope of the summation index

You will notice that although the PVDI remains positive and pointing upward, the summation index has rolled over. This is while the slope of the summation index remains in a downtrend. Both suggest to me that the a ever increasing PVDI is not in the cards. All together, I see PVDI and the associated indexes pointing towards higher equity prices, but on weakening internal demand dynamics.