Advances And Declines

AAA

DEFINITION of 'Advances And Declines'

The number of stocks that closed at a higher price than the previous day's close, and the number of stocks that closed at a lower price than the previous day's close. Technical analysts looks at advances and declines to analyze the overall behavior of the stock market, in order to discern volatility and to predict whether a price trend is likely to continue or reverse. Typically, a market will be more bullish if more stocks advance than decline.

INVESTOPEDIA EXPLAINS 'Advances And Declines'

Advances and declines form the basis of analytical tools like the advance-decline ratio, the advance-decline index and the absolute breath index. For example, a low advance-decline ratio can indicate an oversold market, while a high advance-decline ratio can signal an overbought market. Either of these conditions could mean that a market trend has become unsustainable and is about to reverse.

RELATED TERMS
  1. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth ...
  2. Absolute Breadth Index - ABI

    A market indicator used to determine volatility levels in the ...
  3. Stochastic Oscillator

    A technical momentum indicator that compares a security's closing ...
  4. Divergence

    When the price of an asset and an indicator, index or other related ...
  5. Advance/Decline Index

    A technical analysis tool that represents the total difference ...
  6. Market Value

    The price an asset would fetch in the marketplace. Market value ...
Related Articles
  1. Trading Strategies

    What are the main signals traders use from an Advance/Decline ratio?

    Find out how traders and technical analysts employ the Advance/Decline ratio, and what values are considered important trading thresholds.
  2. Charts & Patterns

    How is the Arms Index (TRIN) calculated?

    Read how to calculate the Arms Index, or TRIN, using the ratio and volume of advances and declines in any given stock index or exchange.
  3. 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.
  4. Trading Strategies

    How can I use market breadth to my advantage?

    Market breadth is a study that compares the number of companies on a given exchange that have created new 52-week highs to the number of companies that have created new 52-week lows. When the ...
  5. Active Trading Fundamentals

    Market Breadth: A Directory Of Internal Indicators

    Discover the indicators that measure the force of the bulls and bears, telling you what a simple price chart cannot.
  6. Trading Strategies

    How do I build a profitable strategy when spotting a Rounding Top pattern?

    Learn a simple stock trading strategy that is designed to profit from a bearish trend reversal following the formation of a rounding top pattern.
  7. Forex Strategies

    How do I implement a forex strategy when spotting a Rounding Top Pattern?

    Learn an aggressive forex trading strategy that can be implemented when a trader recognizes a rounding top pattern signaling a bearish trend reversal.
  8. Technical Indicators

    How are Rounding Bottom patterns interpreted by analysts and traders?

    Understand what a rounding bottom formation is and how it is most commonly interpreted and acted upon by traders and market analysts.
  9. Trading Strategies

    How effective is creating trade entries after spotting a Rising Three Methods pattern?

    Understand the basics of the rising three methods pattern and how this highly reliable pattern lends itself to the creation of effective trade strategy.
  10. Technical Indicators

    How effective is creating trade entries after spotting a Rounding Top pattern?

    Understand the characteristics of the rounding top pattern and how traders can obtain better trade entry points based on the rounding top formation.

You May Also Like

Hot Definitions
  1. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  2. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  3. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  4. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  5. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  6. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
Trading Center