A method locates scene changes in a sequence of images or frames that have been compressed without first decompressing the sequence. The sequence includes subsequences of P-frames between I-frames. DC residual coefficients including sign information are extracted from the sub-sequences of P-frames. If the number of residual coefficients in the P-frames exceed a predetermined threshold, then a scene change is indicated. Positive coefficients indicate fade-ins, and negative coefficients indicate fade-outs.