Advance - Decline line (AD-Line)

Line measuring advances and declines that reflects market breadth. In its simplest form ADLine is a summation over time of the net daily difference between the number of advancing issues and the number of declining issues. We use slightly improved formula which takes into account also number of unchanged issues.

The exact AFL formula for ADLine is:

Difference = ( AdvIssues() - DecIssues() ) / ( UncIssues() + 1 );
DiffSqrt = IIF( Difference > 0, sqrt( Difference ), - sqrt( - Difference ) );
ADLine = Cum( DiffSqrt );

This is a classical indicator which tends to give a good reading of the overall strength of the market. A break in the A/D line usually proceeds a break in prices. Look for non-confirmation and divergence.