Absolute Breadth Index - ABI

DEFINITION of 'Absolute Breadth Index - ABI'

A market indicator used to determine volatility levels in the market without factoring in price direction. It is calculated by taking the absolute value of the difference between the number of advancing issues and the number of declining issues. Typically, large numbers suggest volatility is increasing, which is likely to cause significant changes in stock prices in the coming weeks.

BREAKING DOWN 'Absolute Breadth Index - ABI'

This tool is classified as a breadth indicator because the advancing/declining values are the only values used to create it. This index can be calculated using any exchange or a subset of an exchange, but traditionally the New York Stock Exchange has been the accepted standard.

To learn more on how to use this indicator, check out "What are the best technical indicators to complement the Haurlan Index?"

RELATED TERMS
  1. Toraku Index

    A technical indicator that compares the number of advancing stocks ...
  2. Market Indicators

    A series of technical indicators used by traders to predict the ...
  3. Breadth Indicator

    A mathematical formula that uses advancing and declining issues ...
  4. Breadth Thrust Indicator

    A technical indicator used to ascertain market momentum. The ...
  5. Market Breadth

    A technique used in technical analysis that attempts to gauge ...
  6. Breadth of Market Theory

    A technical analysis theory that predicts the strength of the ...
Related Articles
  1. Active Trading Fundamentals

    Market Breadth: Advance/Decline Indicators

    Thirty stocks make up the Dow Jones Industrial Average. If the Dow moves up 20 points, there's no way to tell from that number if the increase is the result of only one stock going way up or ...
  2. Active Trading Fundamentals

    Market Breadth: Introduction

    Each day at the posts of specialists at the New York Stock Exchange, and inside the networked computers of Nasdaq market makers, a battle between bulls and bears rages. Each side tries to pull ...
  3. Active Trading Fundamentals

    Market Breadth: Conclusion

    This directory on market breadth introduces traders to how they can gain an advantage in the market, but it will take time to master the movements of each individual indicator. Try following ...
  4. Investing

    Volatile Stocks: Great, If You Have The Stomach

    Volatile stocks can be a lucrative opportunity for short-term traders. For buy-and-hold investors, it's a much different story.
  5. Trading Strategies

    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) ...
  6. Active Trading

    Introduction To The Arms Index

    Developed in 1967 by Richard Arms, this volume-based breadth indicator can be applied over various time periods.
  7. Insurance

    Exploring Oscillators and Indicators: Market Indicators

    By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.com The technical indicators that are generally aimed at specific stocks, which were discussed in previous sections, can also ...
  8. Options & Futures

    Option Volatility: Historical Volatility

    By John Summa, CTA, PhD, Founder of OptionsNerd.comVolatility is both an input to valuation models (statistical/historical) and an output (implied). Just why this is so will become clearer once ...
  9. Trading Strategies

    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 ...
  10. Investing

    3 Reasons to Ignore Market Volatility (VIX)

    If you can keep your head while those about you are losing theirs, you can make a nice return in roiling markets.
RELATED FAQS
  1. What are the most common strategies for using the Absolute Breadth Index (ABI)?

    Read about some of the ways in which technical investors use the absolute breadth index to measure whether a market trend ... Read Answer >>
  2. How is the Absolute Breadth Index (ABI) calculated?

    Discover how technical analysts calculate an absolute breadth index to measure the volatility of indexes or sectors to predict ... Read Answer >>
  3. What are the most important trading signals used with the Absolute Breadth Index ...

    Discover which trading signals technical analysts look for when utilizing the absolute breadth index, a non-standard volatility ... Read Answer >>
  4. What are the best technical indicators to complement the Haurlan Index?

    Discover which technical indicators make the best complements to the Haurlan index, a market breadth tool designed to identify ... Read Answer >>
  5. Why is the Breadth Indicator useful for tracking the overall economy?

    See how analysts might use technical breadth indicators to judge the health of the economy as a whole, and learn why one ... Read Answer >>
  6. Why is it important for traders and investors to follow market indicators?

    Learn about market indicators such as the Advance/Decline Index and market breadth. Discover why these indicators are so ... Read Answer >>
Hot Definitions
  1. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  2. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  5. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  6. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
Trading Center