The Advance Decline (AD) Index is an indicator put together by the New York Stock Exchange that is calculated by subtracting the number of stocks that are declining for the day from the number of stocks that are advancing for the day.
Since it’s cumulative, each day’s calculation is added or subtracted from the previous day’s indicator. If the AD Index is rising, it could mean the market is strengthening, and if the AD index is falling, it could signal the market may be tanking.
As an example, let’s say the AD Index on the S&P 500 is currently at 2000. At the end of the trading day, 400 stocks were up and 100 were down, so you would subtract the two and add it to the AD Index value, increasing the S&P 500 to 2300. This suggests the market is gaining momentum.
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