A ratio above 1 means more stocks rose than fell during the day, and a ratio below 1 means decliners outnumbered advancers. Because the daily ratio jumps around, traders usually follow its 10-day moving average. When the average stays high for several days, the rally is broad but may be stretched; when it drops to very low levels, selling has become excessive and a rebound often follows. Unlike the A/D Line, the ratio does not depend on the number of stocks in the index, so its readings are easier to compare between indexes.
The charts above show the Advance/Decline Ratio under the price of 24 stock indexes, from the S&P 500, Nasdaq 100 and Russell 2000 to the FTSE 100, DAX and Nifty 50, so you can compare breadth across markets at a glance. Click a chart to open a larger version.
Related stock screens: New 52-Week High Stocks, New 52-Week Low Stocks and Price Crossed Above MA(200) Stocks. You can also use market breadth as a filter in your own screens and strategies in the Formula Screener and the Strategy Backtester.
The Advance/Decline Ratio compares the number of advancing stocks with the number of declining stocks in an index. It shows how broad a daily market move is.
Divide the number of advancing stocks by the number of declining stocks. For example, 300 advancers and 200 decliners give a ratio of 1.5.
A ratio above 1 is bullish because advancers outnumber decliners, and a ratio below 1 is bearish. Very high readings of the 10-day average point to an overbought market and very low readings to an oversold one.
The A/D Line is a running total of advancers minus decliners and shows the breadth trend. The A/D Ratio is a daily ratio of advancers to decliners and is used to spot short-term extremes.
Yes. In the Formula Screener, advdecratio is the daily ratio and advdecratioma is its 10-day SMA. For example, (advdecratioma > 1)@nyse and price ca sma(50) finds stocks crossing above their 50-day SMA while NYSE breadth is positive.
