Advance/decline Ratio (A/D)

Categories: Technical Analysis,

An often quoted technical indicator that measures market breadth. The A/d ratio is calculated by dividing the number of advancing issues by the number of declining issues, with a ratio of 1 to 1 reflecting a neutral bias in the broader market. Technicians interpret any ratio that indicates that advances outnumber declines (2 to 1) as evidence of an overall bullish sentiment. Conversely, a technician would see a market in which declining issues outnumber advancing issues as having a bearish bias. Like the advance/decline line (A/D or AD), the periodicity in which an investor calculates the A/d ratio can vary from every few minutes (intraday) to daily, weekly or longer.