The Advance/Decline Line is a market breadth indicator that shows the degree of participation of individual stocks in a markets rise or fall. It does so by subtracting the number of declining stocks from the number of advancing stocks. The indicator cumulates these differences, called net advances, over a certain period by adding the difference between the number of declining and advancing stocks to the previous indicator value. It can be used to confirm the strength of a trend, because the more stocks that participate, the stronger the overall trend and vice versa. Traders look for divergence to spot potential trend reversals. The indicator is best used in combination with other analysis techniques.
