Advance-Decline Line

#1
Advance-Decline Line

With so much talk of this indicator in the media, I though it would be useful to throw some light on this market breath indicator.

The Advancing-Declining Issues is calculated simply by subtracting the number of declining issues from the number of advancing issues.

This difference between the number of advancing and declining issues is the foundation of many market breadth indicators. These indicators include the Advance/Decline Line, Advance/Decline Ratio, Absolute Breadth Index, Breadth Thrust, McClellan Oscillator and Summation Index. Indicators that use advancing and declining issues in their calculations are called market breadth indicators.

The AD Line peaks out well ahead of the more widely followed market indices and averages. It provides such useful information as:

Overall market strength
Rising or falling trends
Whether the trend is intact, and
The length of the current trend

Interpretation

The AD Line is a good indicator of overall market strength; and many feel it is more revealing than popular indices such as BSE Sensex, NSE Nifty, etc. This is because the AD line is usually calculated on all the stocks listed in the markets rather than just 30 or 50 stocks that make up the major indices.

When the AD line is rising, more stocks are advancing than declining and the A/D Line moves up.

When the AD line is falling, more stocks are declining than advancing and the A/D Line moves down.

Those of you who may be interested can view that attached chart of NSE 50 with the AD Line overlaid. You can see that although the NSE 50 continuous to make new highs the AD Line (Red Line) is declining.
 

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#2
Dear TATrader,
I have Metastock pro7. I do not have the Indicators that you have mentioned in your very informative article ( Advance/Decline Line, Advance/Decline Ratio, Absolute Breadth Index, Breadth Thrust, McClellan Oscillator and Summation Index). Please provide me the information where we can get the formulas for the above. If you have the formula can you send it to my email id. Or you can also give the formula here in this forum. Thanking you in advance.
gvnarendra
 
#3
gvnarendra said:
Dear TATrader,
I have Metastock pro7. I do not have the Indicators that you have mentioned in your very informative article ( Advance/Decline Line, Advance/Decline Ratio, Absolute Breadth Index, Breadth Thrust, McClellan Oscillator and Summation Index). Please provide me the information where we can get the formulas for the above. If you have the formula can you send it to my email id. Or you can also give the formula here in this forum. Thanking you in advance.
gvnarendra
You need two pieces of information for calculating all these indicators. They are:

Number of advancing issues

and

Number of declining issues

The A/D Line is calculated by subtracting the number of stocks that declined in price for the day from the number of stocks that advanced, and then adding this value to a cumulative total.

The A/D Ratio is calculated by dividing the number of stocks that advanced in price for the day by the number of stocks that declined.

The Absolute Breadth Index is calculated by taking the absolute value of the difference between number of Advancing stocks and Declining stocks.

The Breadth Thrust is a market momentum indicator. Calculated by dividing a 10-day exponential moving average of the number of advancing issues by the number of advancing plus declining issues, a "Breadth Thrust" occurs when the indicator rises from below 40% to above 61.5%. This indicates that the market has rapidly changed from an oversold condition to one of strength yet has not become overbought.

The McClellan Oscillator is the difference between 19-day and 39-day exponential moving averages of advancing minus declining issues.

The Summation Index is a popular market breadth indicator that is ultimately derived from the number of advancing and declining stocks in a given market. It is derived from the McClellan Oscillator by tracking its daily accumulation or "summation". This provides a longer-term view of the McClellan concept. Many people regard it as an excellent indicator of the overall "health" of the market and the market's current trend.

Summation Index =
1000 + (10%Trend - 5%Trend) - ((10 x 10%Trend) + (20 x 5%Trend))
where:
5%Trend = 39-day EMA of (Advancers-Decliners)
10%Trend = 19-day EMA of (Advancers-Decliners)
 
#5
Can anyone tell me where I can get the advance and decline issues data every day?

MY data provider (vitratechindia) does not provide this data!
 
#6
You can get the Advance Decline details for NSE from -

http://www.nseindia.com/content/fo/fo_markettoday.htm

Just go to the link against "Market Activity Report:"
 
#7
lalitgu said:
You can get the Advance Decline details for NSE from -

http://www.nseindia.com/content/fo/fo_markettoday.htm

Just go to the link against "Market Activity Report:"
Thanks Lalitgu,

The link you have listed if for the futures market.

For the cash market the correct link is http://www.nseindia.com/content/equities/eq_markettoday.htm

I will now have to plot this data manually every day.
 
#8
Dear TATrader, The AD ratio would be of more help only in knowing the turning points in the market and is to be purely viewed from trading perspective and not from the point of long term investments.
 
I

iqnashik

Guest
#9
Where can I find graphical view of daily advance decline ratio of only NSE 50 Stocks ?
 
#10
Hey can anyone let me know from where can i get the advance / decline data for NSE, BSE & F&O for the last 1-2 years?

I am currently looking downloading the market activity report, however it will take considerable amount of time to download & extract for each day.

Incase there is no other way, then i will have to download the market activity report for each day.

please let me know. any help is much appreciated.
 

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