1. Advance-Decline Line

2. bSimplest and most widely used measure of market breadth. bIt is the foundation of many market breadth indicators, including the McClellan Oscillator and the Summation Index. bEffective gauge of market strength. bBy studying the A/D Line you can see if the market is in a rising or falling trend, if the trend is still intact, and how long the trend has prevailed.

3. Different calculations used for the Advance-Decline Line A/D Line (Breadth) It is a simple ten day moving average of the following: (advancing issues)/(total number of both advancing and declining issues) Daily readings above.5 are considered “bullish” and below.5 “bearish.” A/D Line (Cumulative Daily) (advancing issues)-(declining issues) First, start with a large number, e.g. 10,000. Each following day add or subtract the difference between the advancing and declining issues.

4. A/D Line (Cumulative Daily) Important to look at underlying pattern or trend, not the number.

5. A/D Line Divergence: When the DJIA (or other index) and the A/D Line move in opposite directions. Historically, the index will correct and go the direction of the A/D Line. Other uses for A/D Line

7. Problems with the Advance-Decline Line Subjective in interpretation. It is not a forward looking indicator. Best used only as a trend indicator.