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| ====== Advance-Decline Volume Percent ====== | ====== Advance-Decline Volume Percent ====== | ||
| - | ===== Introduction ===== | + | ===== What Is the Advance-Decline Volume Percent Indicator? ===== |
| - | Advance-Decline Volume Percent is a breadth indicator that measures the percentage of Net Advancing Volume. After the market close, StockCharts.com calculates this indicator for the nine sector SPDRs and several indexes. AD Volume Percent forms the basis for a breadth oscillator or the AD Volume Line. These indicators can then complement the analysis of the underlying security. For example, the AD Volume Line based on AD Volume Percent for the Consumer Discretionary SPDR (XLY) would complement the analysis of XLY. This article will explain how to use this indicator and show SharpChart examples. A sample list of symbols can be found at the end of this article. | + | Advance-Decline Volume Percent is a breadth indicator designed to measure the percentage of Net Advancing Volume. AD Volume Percent is the foundation for a breadth oscillator or the AD Volume Line. These indicators can then complement the analysis of the underlying security. For example, the AD Volume Line based on AD Volume Percent for the Consumer Discretionary SPDR (XLY) would complement the analysis of XLY. After the market closes, StockCharts.com calculates this indicator's value for the nine sector SPDRs and several indexes. This article explains how to use this indicator effectively using illustrative SharpChart examples. A list of sample symbols can be found at the end of this article. |
| - | ===== Calculation ===== | + | ===== How Do You Calculate Advance-Decline Volume Percent? ===== |
| - | StockCharts.com has AD Volume Percent data going back several years. Note, however, that these calculations are based on the list of stocks in the underlying security or index (i.e. XLK), which do change. This means the breadth data from two years ago is based on the then-current holdings, which may be different from the present-day holdings. Even though the holdings for the nine sector SPDRs and major indexes are relatively stable, chartists should keep this in mind if using a long-term chart. | + | StockCharts.com has AD Volume Percent data going back several years. Note, however, that these calculations are based on the list of stocks in the underlying security or index (i.e., XLK), which do change. This means the breadth data from two years ago is based on the then-current holdings, which may be different from the present-day holdings. Even though the holdings for the nine sector SPDRs and major indexes are relatively stable, chartists should consider this if using a long-term chart. |
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| - | In the first numerical example, total volume is 41 million shares, advancing volume is 36 million shares and declining volume is 5 million shares. AD Volume Percent is positive (+75.60%) because advancing volume is greater than declining volume. In the second example, total volume is 43 million, advancing volume is 7 million and declining volume is 36 million. AD Volume Percent is negative (-67.44%) because declining volume is greater than advancing volume. | + | In the first numerical example, the total volume is 41 million shares, the advancing volume is 36 million shares, and the declining volume is 5 million shares. AD Volume Percent is positive (+75.60%) because advancing volume is greater than declining volume. In the second example, total volume is 43 million, advancing volume is 7 million and declining volume is 36 million. AD Volume Percent is negative (-67.44%) because declining volume is greater than advancing volume. |
| {{:market_indicators:ad_vol_percent:advp-01-xlyexam.png|AD Volume Percent - Chart 1}}\\ | {{:market_indicators:ad_vol_percent:advp-01-xlyexam.png|AD Volume Percent - Chart 1}}\\ | ||
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| As the chart above shows, AD Volume Percent fluctuates between -100% and +100% with zero as the middle line. A +100% reading means all volume went to advancing stocks. In other words, all stocks closed higher on the day. A -100% reading means all volume went to declining stocks. Extreme readings are the exception rather than the norm. | As the chart above shows, AD Volume Percent fluctuates between -100% and +100% with zero as the middle line. A +100% reading means all volume went to advancing stocks. In other words, all stocks closed higher on the day. A -100% reading means all volume went to declining stocks. Extreme readings are the exception rather than the norm. | ||
| - | ===== Interpretation ===== | + | ===== How Do You Interpret Advance-Decline Volume Percent? ===== |
| As a breadth indicator, AD Volume Percent measures the money flow behind a particular move. An advance with AD Volume Percent exceeding 70% shows strong buying pressure because most of the volume went into advancing stocks. Conversely, a decline with AD Volume Percent dipping below -70% reflects strong selling pressure. | As a breadth indicator, AD Volume Percent measures the money flow behind a particular move. An advance with AD Volume Percent exceeding 70% shows strong buying pressure because most of the volume went into advancing stocks. Conversely, a decline with AD Volume Percent dipping below -70% reflects strong selling pressure. | ||
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| The chart below shows the 21-day simple moving average for AD Volume Percent of XLY ($XLYUDP). The actual $XLYUDP plot is invisible, which is a setting that can be applied under Chart Attributes/Type. The horizontal lines are set at +5%, 0% and -5%. Notice that crosses above/below the zero line are quite susceptible to whipsaws and bad signals. Traders would be better off using bullish and bearish thresholds just above/below the zero line. In this example, a move above +5% is deemed bullish and a move below -5% is deemed bearish. These signals are highlighted with the red and green lines. Don’t go looking for the perfect signal because all oscillator systems will produce their share of whipsaws and bad signals. | The chart below shows the 21-day simple moving average for AD Volume Percent of XLY ($XLYUDP). The actual $XLYUDP plot is invisible, which is a setting that can be applied under Chart Attributes/Type. The horizontal lines are set at +5%, 0% and -5%. Notice that crosses above/below the zero line are quite susceptible to whipsaws and bad signals. Traders would be better off using bullish and bearish thresholds just above/below the zero line. In this example, a move above +5% is deemed bullish and a move below -5% is deemed bearish. These signals are highlighted with the red and green lines. Don’t go looking for the perfect signal because all oscillator systems will produce their share of whipsaws and bad signals. | ||
| - | ===== Conclusion ===== | + | ===== The Bottom Line ===== |
| - | AD Volume Percent is a breadth indicator that measures buying and selling pressure within a particular group of stocks. The price of the underlying security (i.e. XLK) reflects what is happening on the outside. AD Volume Percent for XLK ($XLKUDP) shows what is happening on the inside. Changes sometimes occur on the inside first; breadth indicators can help chartists anticipate these changes. The AD Volume Line is a cumulative indicator that can be used for short-term and long-term analysis. A moving average of AD Volume Percent is more sensitive and acts like a momentum oscillator. | + | AD Volume Percent is a breadth indicator that measures buying and selling pressure within a particular group of stocks. The underlying security price (i.e., XLK) reflects what is happening on the outside. AD Volume Percent for XLK ($XLKUDP) shows what is happening on the inside. Changes sometimes occur on the inside first; breadth indicators can help chartists anticipate these changes. The AD Volume Line is a cumulative indicator that can be used for short-term and long-term analysis. A moving average of AD Volume Percent is more sensitive and acts like a momentum oscillator. |
| ===== SharpCharts ===== | ===== SharpCharts ===== | ||
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| ===== Symbol List ===== | ===== Symbol List ===== | ||
| - | StockCharts.com users can access [[https://stockcharts.com/search/?q=%22Advance-Decline%20Volume%20Percent%22§ion=symbols|an up-to-date list of symbols]] for all our Advance-Decline Volume Percent indicators. From this list, click the "Mentions" icon to the right of a specific symbol for more details about the symbol, as well as recent mentions in Public ChartLists, blog articles, and more. | + | StockCharts.com users can access [[https://stockcharts.com/search/?q=%22Advance-Decline%20Volume%20Percent%22§ion=symbols|an up-to-date list of symbols]] for all our Advance-Decline Volume Percent indicators. From this list, click the "Mentions" icon to the right of a specific symbol for more details about the symbol and recent mentions in Public ChartLists, blog articles, and more. |
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| + | ===== Advance-Decline Volume Percent FAQs ===== | ||
| + | ==== What is Advance-Decline Volume Percent? ==== | ||
| + | Advance-Decline Volume Percent is a breadth indicator that measures the percentage of Net Advancing Volume. It can complement the analysis of the underlying security. | ||
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| + | ==== How can AD Volume Percent help in market analysis? ==== | ||
| + | As a breadth indicator, AD Volume Percent measures the money flow behind a move. High positive values indicate strong buying pressure, while highly negative values indicate strong selling pressure. | ||
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| + | ==== What are the significance of divergences in the AD Volume Line? ==== | ||
| + | Divergences can signal potential trend reversals. For instance, if the Technology SPDR (XLK) moves to a new high but the AD Volume Line doesn't, it may indicate weakening buying pressure and potential for a trend reversal. | ||
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| + | ==== Can moving averages be applied to AD Volume Percent? ==== | ||
| + | Yes, applying a moving average to AD Volume Percent can create an oscillator that fluctuates above/below the zero line, similar to a momentum oscillator. | ||
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| + | ==== What insights does AD Volume Percent provide over the price of the underlying security? ==== | ||
| + | While the price of the underlying security reflects external happenings, the AD Volume Percent offers insights into internal dynamics, showing what is happening inside a particular group of stocks. | ||
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| + | ==== What should traders consider when using AD Volume Percent as an oscillator? ==== | ||
| + | It's important to note that crosses above/below the zero line can lead to whipsaws and potentially misleading signals. Using thresholds slightly above/below the zero line, like +5% or -5%, may provide more reliable signals. | ||
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