Advance/Decline Line

The Advance/Decline Line is possibly the most popular market breadth indicator. It is a cumulative total of the Advancing-Declining issues for a given stock exchange (usually the NYSE).

Advance/Decline Line

The Advance/Decline Line is possibly the most popular market breadth indicator. It is a cumulative total of the Advancing-Declining issues for a given stock exchange (usually the NYSE).

Note that the number of stocks trading on a particular market varies over time.  Thus there is no consistent maximum or high value.When compared to market index movement, the Advance/Decline Line has proven to be an effective gauge of the stock market's strength.  


Advance/Decline Line Calculation

See Advance/Decline Index for calculation of the Advance/Decline Line.

 

Advance/Decline Line Interpretation

There are several ways to use the Advance/Decline Line.  One of the more common applications is to look for divergence between the stock market index and the Advance/Decline Line as shown below.

Chart showing divergence between stock price and the Advance/Decline Line

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