The OVI Index

The OVI Can Show You Where the Markets Are Headed Next


"Guy Cohen's OVI Indicator Gives You a Unique and Valuable Insight to What the Insiders Are Up To!" 

The truth is, no-one can predict 100% where the markets are going at any given time, but I've developed something that can give us a better clue, especially during certain market setups.  And frankly, that's all we need to become consistently great traders and investors.  You can stick with just one inspired method like this and you'll make windfall profits safely.

"I've created a new market indicator called ... The OVI"   

The OVI is a simple line that oscillates between -1 and +1. 

  • When the OVI is positive we're more inclined to focus on buying stocks and when it's negative we're more inclined to focus on shorting stocks.  
  • The OVI is derived from options transaction data but you don't need to know anything about options to use it! 
  • Effectively the OVI is tracking what the smartest, savviest options traders are up to ... When we combine this with specific chart patterns we have a massive edge.  

Here's Why the OVI is Unique and What it Can Do For You

  • The OVI reveals what the smartest intvestors are quietly getting up to, by analyzing the options transactions for each stock.  It does this by measuring option volatility, option volume and open interest.  
  • You don't need to know anything about options to understand the OVI.  It's just a line that oscillates between +1 and -1.  
  • The OVI is focused on actual transactions.  Traditional indicators such as moving averages, MACD, RSI, Stochastics, Gann, Elliott, Fibonacci etc, are all derived from stock price (and some indicators also include volume).  In my experience the price itself (and the pattern it's forming) is the best indicator of price action as it is immediate, so those traditional lagging indicators must be inferior. 
  • What we need is a transaction-based indicator to supplement a price-based indicator.  But we need something that more pre-emptive than just looking at share volume.  The OVI often moves decisively BEFORE the stock price breaks out.  This is what gives us such a powerful edge.  
  • In this way, the OVI LEADS the market.  This gives you a huge advantage, especially prior to a potential price breakout.  Traditional indicators like MACD, Stochastics, moving averages and RSI are smoothed by way of averaging several days of data.  This creates a lagging effect, which means they will tend to signify something only after the market has made its move. This is all very well in theory but not so good in practice where we need something more immediate. 

In broad terms, the OVI tends to be positive when a market is trending up, and negative when it's trending down.  The OVI typically works best with the larger stocks with liquid options, and has even worked very well with the SPY and QQQ ETFs for the S&P and Nasdaq respectively.  

You can see this clearly with the S&P during a major reversal of trend:  



For a big stock with huge liquidity in its options like BSC, it's unusual for the OVI to plummet quite like this, so it's certainly on the radar now.  However, one swallow doesn't make a summer and it's possible that this could be a blip.  That said, if we break through this support then a short trade can be activated.  

From the above chart we can see that BSC breaks support immediately, and as it approaches the next support level after three days the OVI is still pinned to its maximum negative reading.  Now this is definitely unusual and if you haven't shorted it by now, then you sure do want to on the next break of support which is at the January low of $68.18.  

What happens next is extraordinary.  The stock breaks the January low and plunges to a low of $2.84 in just six days!  There are a couple of things to note.  First, the OVI is strongly negative as this happens and indeed almost two weeks beforehand.  

The second thing to note is that the OVI comprehensively outdid share volume as an alert that something was happening with the stock.  Certainly there's nothing particularly unusual with volume in the chart below, but the OVI has been at its maximum negative reading for a few days already by the time the stock breaks $70.  


In the next chart we see how volume did rise dramatically, but only when the share price had begun to plummet and several days after the OVI had already alerted us.  


The OVI With Bullish Stocks 

As we've just seen, the OVI is often ahead of the stock in terms of a major breakout from a consolidation pattern.   In the next chart we see AAPL forming a classic bull flag pattern just below $410.  At the same time the OVI has been consistently and strongly positive for over a month by now.  


Now see what happened next ... In just 2 months, AAPL soars by over $140 with the OVI in attendance all the way.  It only takes one of these to make a major difference to your trading performance.  


We use the OVI in the context of a very safe trading plan, combining it with breakout patterns such as flags and sideways channels.  This gives us an ideal way of using the OVI as a LEADING indicator, with maximum safety and the potential for windfall profits as you've just seen.  

As you can see by now, the OVI is one of the most powerful indicators to help supercharge your trading profits.  It works best with liquid stocks where there’s plenty of activity and will give you the edge you need.


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