MARKET BREADTH · ADVANCE/DECLINE LINE
Advance/Decline Line — how many stocks are really rising?
An index can climb while most of its members fall, if a few giants do the lifting. The advance/decline line keeps score of the members themselves: every day it counts how many stocks closed up and how many closed down, and adds the difference to a running total. When the index and the A/D line rise together, the rally is broad. When the index makes new highs and the A/D line does not, fewer and fewer stocks are carrying it. Built nightly for the S&P 500, Nasdaq 100 and Dow 30 from every member's daily close.
Today's reading
Pick an index. The card compares the index and its A/D line against their own one-year highs.
Index vs its advance/decline line
Top: the index. Bottom: the running count of advancers minus decliners. Shaded stretches mark the divergences described below.
New 52-week highs and lows
How many members set a one-year high (green, up) or a one-year low (red, down) each day, with the index above for reference. Follows the index and range chosen above. Nasdaq 100 and S&P 500 only.
A member counts as a new high when its intraday high beats its highest high of the previous 252 sessions, and as a new low when its low undercuts its lowest low of that window, the same rule the exchanges use for their daily tallies. Prices are split-adjusted but not dividend-adjusted. Today’s membership is applied to the whole history, so the early years miss stocks that have since left the index.
What the advance/decline line measures
Each trading day, take every member of the index and ask one question: did it close higher or lower than yesterday? Subtract the decliners from the advancers and add the result to a running total. That total is the advance/decline line. A day when 350 S&P stocks rose and 150 fell adds +200; a day when 100 rose and 400 fell subtracts 300. The level of the line means nothing on its own — it starts at zero on the first day we track — but its direction, and whether it keeps pace with the index, means a lot.
The index itself is weighted by company size, so a handful of giant stocks can move it. The A/D line gives every member one vote. That is exactly why the two can disagree, and the disagreement is the signal.
How this page defines a divergence
- Negative the index is within 1% of its one-year high while the A/D line sits more than a quarter of its one-year range below its own high — new highs on narrowing participation.
- Positive the A/D line is at a one-year high while the index is still more than 3% below its own — broad strength the headline number has not caught up with.
- Confirmed index and A/D line are both at or near their highs — the rally is broad.
Negative divergences since 2016 — what happened next
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An episode is a run of at least five trading days that meet the negative-divergence definition above (gaps of up to three days are bridged). "Index 3 months later" is the index's price change 63 trading days after the episode began, which is the earliest point you could have acted on it. Baseline is the same figure measured from every trading day since 2016.
How to use this information
- Confirmation is the normal state. Most of the time the A/D line and the index move together, and a rising A/D line alongside new index highs is the healthiest picture there is. It is not a timing tool for buying.
- Negative divergences are a yellow flag, not a sell order. A market led by fewer stocks is more fragile, but it can stay that way for months. Use the table above to judge how much the warning has actually been worth, and read it together with the BATS gauge and the other breadth measures rather than on its own.
- Positive divergences tend to appear near lows. When more stocks are rising than the index lets on, the average stock has already turned. It is one of the more reliable "the worst may be over" clues in market breadth.
- Compare the three indexes. The Dow has only 30 members, so its line is choppy and a few names dominate. The S&P 500's line is the broadest and smoothest; the Nasdaq 100's shows whether the tech rally is broad or just the biggest names.
- Caveats. We apply today's members to the whole history, so stocks that were removed along the way are missing and the early years flatter the line a little; that is why the series starts in 2016. Every member counts once, with no size weighting. The classic Wall Street version uses every stock on the NYSE, including bond funds and foreign listings; ours is index-only, so the levels will not match other sources, but the behaviour is the same.
Reminder: None of this is investment advice. Historical patterns are not guarantees. Always do your own research or talk to a financial professional.