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Advanced/Decline Line & Ratio Oscillator

The advance/decline line is one of the most popular market breadth indicators.  It is a very simple measure of how many stocks are taking part in a rally or sell-off and it's usually calculated from NYSE stocks.  The A/D line is calculated as follows:

A/D Line = (# of Advancing Stocks - # of Declining Stocks) + Yesterday's A/D Line Value

The Advance/Decline Ratio Oscillator (ADRO) is a variation on the advance/decline line where it accounts for total market volume beyond the NYSE.  The ADRO has a tendency to identify near-to-intermediate tops when the indicator is above 4.00, and near-to-intermediate bottoms when the indicator is at -2.00 or below.  Below is an example of the ADRO through April 17, 2009, where on March 30, 2009 the market had 12 advancing stocks for every 1 declining stock, representing a strong rally with solid market breadth.