Advance/Decline Line - Advance/Decline Index

  

The Advance Decline (AD) Index is an indicator put together by the New York Stock Exchange that is calculated by subtracting the number of stocks that are declining for the day from the number of stocks that are advancing for the day.

Since it’s cumulative, each day’s calculation is added or subtracted from the previous day’s indicator. If the AD Index is rising, it could mean the market is strengthening, and if the AD index is falling, it could signal the market may be tanking.

As an example, let’s say the AD Index on the S&P 500 is currently at 2000. At the end of the trading day, 400 stocks were up and 100 were down, so you would subtract the two and add it to the AD Index value, increasing the S&P 500 to 2300. This suggests the market is gaining momentum.

Related or Semi-related Video

Finance: What is the SEC?28 Views

Up Next

Finance: What is the Advance Decline Ratio?
14 Views

What is the Advance Decline Ratio? The advance decline ratio is used to determine how the market performed on a given day. It does this by comparin...

Finance: What are the NASDAQ and NYSE?
74 Views

What are NASDAQ and the NYSE? NYSE stands for New York Stock Exchange, and NASDAQ is more or less a component of this. The stock exchange is where...

Finance: What is the Dow Jones Industrial Average?
2710 Views

What is the Dow Jones Industrial Average? The Dow Jones Industrial Average is usually just called the Dow. It’s an average of 30 of the most well...

Find other enlightening terms in Shmoop Finance Genius Bar(f)