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 Thrust Indicator

    A technical indicator used to ascertain market momentum. The ...
  4. McClellan Oscillator

    A market breadth indicator that is based on the difference between ...
  5. Absolute Value

    A business valuation method that uses discounted cash flow analysis ...
  6. Ease Of Movement

    A technical momentum indicator that is used to illustrate the ...
Related Articles
  1. Technical Indicators

    Discovering the Absolute-Breadth Index and the Ulcer Index

    It's time to acquaint yourself with these lesser-known yet effective technical indicators.
  2. 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.
  3. 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.
  4. Options & Futures

    Volatility's Impact On Market Returns

    Find out how to adjust your portfolio when the market fluctuates to increase your potential return.
  5. 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.
  6. 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) ...
  7. Investing News

    3 Ways To Invest In A Volatile Environment

    Here are three different ways to use the low volatility index to invest in a volatile market.
  8. Forex Education

    The Fundamentals Of Forex Fundamentals

    Charting is not the only way to analyze the foreign-exchange market. Learn how to apply fundamental analysis to the economic indicators.
  9. Investing News

    Roller coaster 2016 for Stocks? Exploring Global Stock Volatility

    Find out how much volatility global equity investors are in for during 2016 by seeing how much they've experienced over the past five years.
  10. Fundamental Analysis

    4 Key Indicators That Move The Markets

    Find out what reports to watch in order to anticipate and react to market movements.
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. 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 >>
  3. 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 >>
  4. 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 >>
  5. How do I use the Haurlan Index to create a forex trading strategy?

    See how the three components of the Haurlan index can be used by forex traders to assess the strength of buyers and sellers ... Read Answer >>
  6. What is the difference between market indicators and economic indicators?

    Read about the differences between technical market indicators and general economic indicators, and learn how traders and ... Read Answer >>
Hot Definitions
  1. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  2. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  3. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  4. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  5. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
  6. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
Trading Center