A:

This simply means that in a market, more stocks (issues) traded down for the day compared to the number of companies that traded up for the day.

When a stock or issue is considered to be bought it must be trading up for the day or higher than it started the day; the idea being that more people want to buy than sell the stock so they bid the price up. Conversely, if there are more investors wanting to sell than buy a stock, the price will be bid down. It is this idea that allows a stock to be considered bought or sold even though for every transaction there is of course a buyer and a seller.

The measures behind this statement are referred to as advances (up), declines (down), and unchanged. This is a comparative measure that gives investors a deeper understanding of the market's movements. Each of the measures will be compared to each other. For example, if there are 100 stocks in the market with 40 advances, 50 declines and 10 unchanged, the market as a whole is considered to be sold as there are more declines than advances. Financial news reports often use these expressions to describe the day's movements of a particular market, usually the world's largest, based on capitalization, the NYSE.

The advances and declines help give the investor a more in-depth view of the market. For example, say the NYSE Composite Index fell 1.5% with 52% advances, 38% declines and 10% unchanged. This should catch an investor's eye as the NYSE Composite Index itself fell but more issues were bought than sold. If the investor were to limit their focus to just the movement of the exchange and not at the movements of the underlying components they would miss the underlying strength of the exchange. But how can the market have more issues bought yet end the day down 1.5%? This is likely due to specific companies or sectors being extremely sold while the rest of the market is trading up or flat. For instance, say there are a lot of oil companies on an exchange and oil fell $20 during the day. All of these companies would suffer huge losses while other companies would not be affected or see a potential gain due to the lower cost of oil. The market could close down if the loss from oil companies outweighed the gains in the other companies.

(For more on understanding the market, see our Market Strength Tutorial. For more on current advances and declines at several exchanges, go to the bottom of the Investopedia Research page.)

RELATED FAQS
  1. When you buy oil, do you have to buy thousands of stocks at one time or can you start ...

    I am new to oil stocks and want to invest a couple thousand dollars. Do oil stocks pay dividends? Is now the time to ... Read Answer >>
  2. How can a company trade more shares in one day than there are shares outstanding? ...

    The number of shares traded in a single day can be greater than the number of a company's outstanding shares, but this is ... Read Answer >>
  3. What does it mean when my broker says that shares are for auction?

    An auction market is one in which stock buyers enter competitive bids and stock sellers enter competitive offers at the same ... Read Answer >>
  4. Why do stock prices change following news reports?

    Stock prices move up and down every minute due to fluctuations in supply and demand. If more people want to buy a particular ... Read Answer >>
  5. How does an IPO get valued? What are some good methods for analyzing IPOs?

    The price of a financial asset traded on the market is set by the forces of supply and demand. Newly issued stocks are no ... Read Answer >>
  6. What's the difference between a capital market and the stock market?

    Learn about the differences between stock market and capital market. Identify several important stock markets and understand ... Read Answer >>
Related Articles
  1. Trading

    Market Strength: Conclusion

    The usefulness of these indicators depends on what type of investor you are. Long-term investors shouldn't care too much if the S&P futures are up or down before the markets open, whereas ...
  2. Trading

    Market Strength: Advancers to Decliners

    The advance/decline line (A/D) is a technical analysis tool and is considered the best indicator of market movement as a whole. Stock indexes such as the Dow Jones Industrial Average (DJIA) ...
  3. Investing

    How The Stock Market Works

    When you buy a stock, you buy a piece of a company.
  4. Investing

    Advising FAs: How To Explaining Stocks to a Client

    Without a doubt, common stocks are one of the greatest tools ever invented for building wealth.
  5. Investing

    What is the Stock Market?

    A stock market is where shares in corporations are issued and traded. Stock markets are key components of a free market economy.
  6. Trading

    How To Choose Stocks For Day Trading

    Day trading entails trading a stock several times over a day in an effort to profit on its price movements. It’s a risky strategy, but can pay big returns.
  7. Markets

    What is a Market?

    Market is a broad term with varied definitions, but essentially, it’s a physical or virtual location where goods and services are bought and sold.
  8. Investing

    3 Ways To Tell If Your Stock Has Bottomed

    No one can call stock bottoms with absolute certainty, but there are some common trends that appear when stocks are about to hit bottom.
  9. Investing

    The NYSE And Nasdaq: How They Work

    Learn some of the important differences in the way these exchanges operate and the securities that trade on them.
  10. Investing

    Five Minute Investing: Replacing Stock Market Myths

    In the introduction to "Five Minute Investing", I mentioned that the ideas and approaches developed in this book would be unorthodox. In this chapter, I hope to point out and correct a few of ...
RELATED TERMS
  1. Equity Market

    The market in which shares are issued and traded, either through ...
  2. McClellan Oscillator

    A market breadth indicator that is based on the difference between ...
  3. Primary Listing

    The main stock exchange where a publicly traded company's stock ...
  4. Listing Requirements

    Various standards that are established by stock exchanges (such ...
  5. NYSE Composite Index

    An index that measures the performance of all stocks listed on ...
  6. Bid Support

    A manipulative practice employed to prop up a company’s stock ...
Hot Definitions
  1. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  2. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  3. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  4. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
  5. Russell 3000 Index

    A market capitalization weighted equity index maintained by the Russell Investment Group that seeks to be a benchmark of ...
  6. Enterprise Value (EV)

    A measure of a company's value, often used as an alternative to straightforward market capitalization. Enterprise value is ...
Trading Center