Market indicators are broad measures of market indexes or groups of related securities.

Market indicators provide context to recent market trends, measure the strength or weakness of an index’s price, assess investors’ participation in a recent price trend, or signal extreme market sentiment levels. Internal strength, market breadth, and volatility are measured by market indicators to determine if the market trend is improving or deteriorating.

Market breadth measures the broadness of participation in a market trend by considering data points such as the number of issues advancing relative to the number of issues declining.

Strong market breadth measures indicate the majority of issues in an index are exhibiting the same price behavior. Indicators of market breadth assess the internal strength of the market.

Advance-Decline

The advance-decline line is also referred to as the breadth line and is a cumulative measure of advancing versus declining stocks each day. The number of advancing stocks minus the number of declining stocks is added to the previous day’s value to create a cumulative value. If more stocks rise than fall, the advance-decline line increases.

A rising advance-decline line shows internal strength. The advance-decline line is often compared to a market index such as the S&P 500 for confirmation or divergence relative to the index’s price action. Advance-decline is calculated as a cumulative value line and a ratio (advance-decline ratio or advance-decline percentage).

Net New 52-Week Highs

Net new 52-week highs is a high-low market indicator of breadth where the number of new 52-week lows is subtracted from the number of new 52-week highs. If there are more new highs than new lows on the NYSE, the cumulative net new highs line advances.

The net new 52-week highs indicator is similar to the advance-decline indicator. The net new 52-week highs is displayed as a line chart or histogram. A moving average of the net new 52-week highs line is often tracked as a trend indicator.

How do you read advance-decline?

The advance-decline line is a cumulative measure of advancing stocks versus declining stocks each day. The number of advancing stocks minus the number of declining stocks are added to the previous day’s value to create a cumulative value.

If more stocks rise than fall, the advance-decline line increases. A rising advance-decline line shows internal strength. Advance-decline is calculated as a cumulative value line as well as a ratio.

How to calculate the advance-decline ratio?

The advance-decline ratio is calculated by subtracting the number of declining stocks from the number of advancing stocks in a day and adding the total to the previous day’s value to create a cumulative value.