Overview
The advance and decline line is a cumulative, ongoing sum of the difference between the number of stocks closing higher minus the number of stocks closing lower each day. It can be used as a measure of market strength as it moves higher when the there are more advancing issues than declining issues. It moves lower when there are more declining issues than advancing issues. Plotting the Advance/Decline line allows insight into market strength. At times the major Vietnam indices can continue higher while we are seeing a drop in the advance/decline line. This is called a divergence and warns that we may be at the end of an upward movement and sets the stage for a possible reversal of price trend. However such divergences can exist over a long period of time before evidence of price trend reversal occur. It becomes a matter of sound analysis to build as wide a body of evidence as possible in forming an outlook for the future path of prices.
The concept of the Advance/Decline line is to have a broad measure of daily changes in supply and demand. Technicians often smooth the data using moving averages of the changes in advancing issues and declining issues in order to get a more accurate picture of changing trends in supply and demand. One of the best known indicators derived from smoothing out the advance/decline data is called the McClellan Oscillator.

View A-D Line