Advancing Issues over Declining Issues all divided by Advancing Volume over Declining Volume. That's the formula. What does it mean? Meh.
It's an index that is in theory a representative equation for how strong or weak the market is. The notion runs that when there is heavy volume, 'smart' buyers are putting lots of money into the system. So if you see a big up day with tons of volume, it signals, in theory, that "new money" is entering the market...i.e. cash that was sitting in money market accounts and mattresses by people who perceived more risk than reward in the marketplace have found a shift and decided to get invested.
Does it work? Is it real? Eih. Sorta. Sometimes. Kinda.
Related or Semi-related Video
Finance: What is Trading Volume?29 Views
finance a la shmoop what is training volume training volume with a lot of
volume and this is trading with okay yeah yeah you get the idea [Man shouting into megaphone]
volume here is not about number 11 on the dial but rather about the number of [Person turning up volume dial]
shares trading back and forth on a given day week hour a month and generally
speaking higher levels of volume are a relatively bullish sign for the market [Water pouring]
on all else being equal that is optimistic investors are putting money
into the system buying up stocks and contributing liquidity like they are [Investor money transfer to stock market]
seeking risk they're hopeful they're optimistic lots of volume high liquidity
low volume low liquidity and high is good
Inessa not just a california proposition 64 thing high volumes are attractive to [People protesting for cannabis]
large institutional professional traders and investors because there remains the
perception that if they want to sell a given position well then with high
volumes they can get out quickly so they feel less hesitation about getting in
quickly okay good just checking [Man shouting into megaphone]
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