Tuesday, April 21, 2009

Advance decline line

Also known as the breadth of market indicator, this plots the number of share prices that rise minus the number of share prices that fall over a specific period (usually a day or a week) for a given stock market average (the S&P 500 INDEX, for example). Followers of technical analysis use this to gauge the strength of a stock market. In particular, if the advance-decline line shows a negative return (that is, more shares fall than rise) yet the stock market index continues to rise, they see this as an indication that the market is weak and as a prelude to a fall in the index.

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