Analyze the Advance/Decline Index to Determine Market Direction
The advance/decline index is a tool used by technical analysts to measure the difference between the number of securities whose prices are advancing against those in decline. The index is seen as one of the best gauges of market direction as a whole. Traders generally view a rising value in the advance/decline index as confirmation that an upward trend will continue. The reverse is true if declining securities outnumber those advancing.
The advance/ decline index is calculated simply by subtracting the number of declining securities from those advancing. While the index can be used to chart any major index, it is most often used to measure the direction of the New York Stock Exchange (NYSE).
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The above information is educational and should not be interpreted as financial advice. For advice that is specific to your circumstances, you should consult a financial or tax advisor.
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