Advance Decline Line

by The trader, 5416 days ago

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The Advance-Decline-Unchanged issues for NYSE, AMEX and NASDAQ downloader, which gets the historical number of advancing and declining stocks listed on U.S. Markets (Stocks listed on the New York Stock Exchange, American Stock Exchange and NASDAQ), is used by this Advance/Decline Line item to create a popular composite or market breadth indicator.

The Advance/Decline Line is the most popular Market Breadth indicator. It simply measures the general market sentiment. It tells that the market is strong when there are more advancing stocks than declining stocks and that the market is weak when there are more declining stocks than advancing stocks.
The Advance/Decline Line is calculated by taking the difference between the number of advancing and declining issues and then adding that result to the previous period value.

The composite creates a symbol, whose name is "_Advance_Decline_Line". This symbol will be associated with the Advance/Decline Line data.

You can create an Advance/Decline Line for a specific exchange by changing the composite formula.
For example, to create the 'adv' variable, the formula sums up the number of advancing stocks from the NYSE, AMEX and NASDAQ.
adv = Ticker("^ADVANCE-ISSUES-AMEX", close, Zero) + Ticker("^ADVANCE-ISSUES-NASDAQ", close, Zero) + Ticker("^ADVANCE-ISSUES-NYSE", close, Zero);
To create an Advance/Decline Line for the NYSE exchange, you can change this line (and do the same for the 'dec' variable), so it will become:
adv = Ticker("^ADVANCE-ISSUES-NYSE", close, Zero);

Here are some other market breadth indicators (They all use data downloaded by Advance-Decline-Unchanged issues for NYSE, AMEX and NASDAQ) :
Arms Index - TRIN item creates the Arms Index or TRIN composite index.
Advance Decline Ratio was developed by Normal G. Fosback.
Absolute Breadth Index is calculated by taking the number of advancing stocks and dividing it by the number of declining stocks.

The McClellan Oscillator and Summation Index is another market breadth indicator that uses the Advance/Decline Line in its calculation. However, the McClellan Oscillator and Summation Index item is not a composite index; it is a download item that downloads the McClellan Oscillator and Summation Index values from a website.