Absolute Breadth Index (Percent) [ABI%]

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The Absolute Breadth Index (Percent) function determines the percent activity level of the market by calculating the difference between the advancing and declining issues and dropping the sign. This indicator differs from the other Absolute Breadth Index in that it calculates the results as a percentage. However, that part of the calculation requires the number of unchanged issues, which may not be available from all data sources. Parameters ------------------ Advancing Issues     The number of issues (securities) that closed above their opening price. Declining Issues       The number of issues (securities) that closed below their opening price. Unchanged Issues   The number of issues (securities) that closed at their opening price. Note that while this function is intended for use with these specific values, any values can be used for these parameters, including preprocessed values or values for a subset of the market. Indicator Value ------------------------ The Absolute Breadth Index is calculated by subtracting the number of declining issues from the number of advancing issues and taking the absolute value of the difference. A percentage is then generated by dividing this value by the total number of issues. This provides a rating of the amount of movement the market has in either direction. High values indicate that the market is moving primarily in one direction. Low values indicate that the market as a whole has no significant movement in a single direction. This indicator is typically smoothed with a moving average to filter out day-to-day fluctuations and display longer term trends. The percent version of this indicator can be used with specific thresholds. For example, with a 50-day moving average of this value, readings above 40 percent have been considered very bullish, while readings below 15 percent have been considered bearish. However, note that there is no directional information to confirm these trends. Usage ----------- The Absolute Breadth Index can be used to detect upcoming trends in the market. For example, high values can indicate that broad market increases in price will occur. In general, broad market indicators can be used for trading against broad market indices through options, futures, and mutual funds. They can also be used to increase the effectiveness of more specific signals by adding confirmation or warning of upcoming trends. Source ------------ This indicator is from the book "Stock Market Logic" by Norman Fosback.