Charting Robust AD Lines that Truly Reflect the Broader Market

Jul 12 20:07 2019 Print This Article

The NYSE and Nasdaq are fine as exchanges, but their AD Lines do not tell the entire story when it comes to breadth. The major stock indexes, such as the S&P 500 and S&P Small-cap 600, contain stocks from both exchanges. As such, robust breadth indicators should include stocks from both exchanges and represent the market as a whole, not just one of the two exchanges. Today we will dive into the AD Lines for the NYSE and Nasdaq, and then chart index specific AD Lines, which I consider more robust.

Breadth indicators are important because they measure the degree of participation. Advance-Decline Lines are cumulative measures of net advances (advances less declines). These lines rise when advances outpace declines and fall when declines outnumber advances. An AD Line that is rising and making new highs reflects strong upside participation and this is bullish overall.

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