Gauging Momentum with the NYSE Advance/Decline Line

08/07/2009 12:01 am EST

Focus: STRATEGIES

S. Wade Hansen

Co-Founder, Profiting with Forex (PFX) and Learning Markets

The NYSE Advance/Decline (A/D) Line is a market breadth indicator that compares the number of stocks on the New York Stock Exchange (NYSE) that are advancing, or increasing in price, with the number of stocks that are declining, or decreasing in price.

What the NYSE Advance/Decline Tells Us

The NYSE A/D Line tells us one basic piece of information: Whether bullish or bearish momentum is pushing the stock market.

When more stocks on the NYSE are increasing in value than are decreasing in value, the A/D Line moves higher. And when the A/D Line is moving higher, you know that bullish momentum in the market is increasing.

When more stocks on the NYSE are decreasing in value than are increasing in value, the A/D Line moves lower. And when the A/D Line is moving lower, you know that bearish momentum in the market is increasing.

Watch the video below for more details:

By S. Wade Hansen of LearningMarkets.com

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