Diffusion Index


DEFINITION of 'Diffusion Index'

1. A measure of the percentage of stocks that have advanced in price or are showing a positive momentum over a defined period. It is used in the technical analysis of stocks.

2. A measure of the breadth of a move in any of the Conference Boards Business Cycle Indicators (BCI), showing how many of an indicators components are moving together with the overall indicator index.

BREAKING DOWN 'Diffusion Index'

1. The diffusion index is one of the many different tools used by technical analysts to increase the probability of picking winning stocks. Also known as the advance/decline diffusion index.

2. The diffusion index can help an economist or trader interpret any of the composite indexes of the BCI more accurately - the diffusion index breaks down the indexes and analyzes the components separately, exhibiting the degree to which they are moving in agreement with the dominant direction of the index.

  1. Business Cycle

    The fluctuations in economic activity that an economy experiences ...
  2. Business Cycle Indicators - BCI

    Composite of leading, lagging and coincident indexes created ...
  3. Lagging Indicator

    1. A measurable economic factor that changes after the economy ...
  4. Coincident Indicator

    A metric which shows the current state of economic activity within ...
  5. Fundamental Analysis

    A method of evaluating a security that entails attempting to ...
  6. Advance/Decline Line - A/D

    A technical indicator that plots changes in the value of the ...
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