Advance/Decline Line [ADLine]

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The Advance/Decline Line function determines the strength of the market by calculating the cumulative difference between the advancing and declining issues. 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. 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 Advance/Decline Line is calculated by subtracting the number of declining issues from the number of advancing issues and adding this to the previous value of the indicator. The value of this indicator at the beginning of the data series is considered to be zero. Since this is a cumulative indicator, the actual value is less relevant than the slope and direction of the line. Usage ----------- The Advance/Decline Line is useful for determining the strength of the market. When more stocks are advancing (increasing in price) than declining, the value increases. When more stocks are decreasing in price, the value decreases. The Advance/Decline Line can be compared to current price trends to determine if there is support for those trends. For example, when prices are increasing, but the Advance/Decline Line is decreasing, a decreasing number of stocks are participating in the price increasing. Therefore, the price trend will typically begin to reverse. 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 based on an entry in "Technical Analysis From A To Z" by Steven B. Achelis.