Advance/Decline Line - A/D
A technical indicator that plots changes in the value of the advance-decline index over a certain time period. Each point on the chart is calculated by taking the difference between the number of advancing/declining issues and adding the result to the previous period's value, as shown by the following formula:
A/D Line = (# of Advancing Stocks - # of Declining Stocks) + Previous Period's A/D Line Value
Investopedia Commentary
This indicator is used by many traders to confirm the strength of a current trend and its likelihood of reversing. If the markets are up but the A/D line is sloping downwards, it's usually a sign that the markets are losing their breadth and may be setting up to head in the other direction. If the slope of the A/D line is up and the market is trending upward then the market is said to be healthy.
Related Links
Market Breadth: A Directory of Internal Indicators
Discovering the Absolute-Breadth Index and the Ulcer Index
See also: Arms Index -TRIN, Breadth of Market, Dow Jones Industrial Average - DJIA, Index, Technical Analysis, Technically Strong Market, Technically Weak Market
Also spelled: a/d line, ad lineAD