Advance-Decline

Advance-Decline

In technical analysis, a line plotting the advance-decline index over a period of time. The advance-decline index takes the total of stock issues going up on a trading day and subtracts the number of stock issues declining on the same day. Technical analysts use the index as an indicator of market movements, and use the advance-decline line to confirm a movement. If the line slopes upward over time, this indicates an upward trend; if it slopes downward, the opposite is true.

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Advance-decline (A-D) line. The advance-decline line graphs the ratio of stocks that have risen in value -- the advancers -- to stocks that have fallen in value -- the decliners -- over a particular trading period.

The direction and steepness of the A-D line gives you a general idea of the direction of the market. For example, a noticeable upward trend, which is created when there are more advancers than decliners, indicates a growing market.

A downward slope indicates a market in retreat. At times, however, there may be no clear trend in either direction.