Advances And Declines

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.

BREAKING DOWN '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.